REG - PetroTal Corp. - Additional Details on $65 Million Term Loan

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RNS Number : 3491I  PetroTal Corp.  13 May 2025

PetroTal Provides Additional Details on $65 Million Term Loan to Finance
Erosion Control Investments at Bretana

 

Calgary, AB and Houston, TX - May 13, 2025 - Further to its announcement on
May 12, 2025, PetroTal Corp. ("PetroTal" or the "Company") (TSX: TAL, AIM:
PTAL and OTCQX: PTALF) is pleased to provided additional details on the
syndicated term loan facility it has entered into with Banco Interamericano de
Finanzas ("BanBif") and Corporacion Financiera de Desarrollo ("COFIDE"), the
Development Bank of Peru. All amounts are in US dollars unless stated
otherwise.

 

Key Highlights

 

·    The Term Loan has been established for the purpose of financing
PetroTal's ongoing investments in erosion control infrastructure in the
vicinity of the Bretana oil field; for the common benefit of the operations
and the community;

·    Drawable in two tranches ($50 million and $15 million), with total
commitments of up to $65 million, for a 4-year amortizing term;

·    Fixed annual percentage rate of 8.65%, with manageable covenants and
no material restrictions on distributions to shareholders - highly competitive
terms in a challenging macro environment; and

·    This is COFIDE's first loan focused on environmental and social
financing in Peru's extractive resource sector. PetroTal's long-standing
commitment to the district of Puinahua, and the permanent benefits of the
erosion control project for the village of Bretana, were key factors in the
Company's ability to secure the credit facility.

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

"We are very happy to work with BanBif and COFIDE on this credit facility.
Since PetroTal began operations in 2017, our stakeholders in the district of
Puinahua have been integral to the success of our Company. Our ongoing
commitment to the residents of Puinahua has been evidenced by the
establishment of the 2.5% social fund, through which we have now returned a
total of $21 million to the district. The erosion control project, which will
benefit the village of Bretana for decades to come, is a continuation of our
commitment to the region."

Camilo McAllister, Executive Vice President and Chief Financial Officer of
PetroTal, commented:

"PetroTal has evaluated a number of options to finance our ongoing investments
in erosion control, and we are pleased to have found valued partners in BanBif
and COFIDE. This term loan will be used to fund the construction of critical
erosion control infrastructure, allowing us to unlock the full value of the
Bretana field, while protecting the surrounding community. Importantly, this
loan reinforces our liquidity position and should relieve any doubt about our
ability to finance this project without compromising our ongoing development
program."

Jose Antonio Sarmiento Giove, General Manager COFIDE, commented:

"PetroTal has played an important role in the district of Puinahua, since
2017. The Company has always sought to ensure that the local communities
benefit from production at Bretana, through improvements in education, health,
infrastructure, and sustainability, and this erosion control project is
another example of that. The project will aim to reduce further erosion along
the river line, protecting local communities and ensuring that villagers can
continue to go about their day to day lives without further worry. We look
forward to working with the PetroTal team on this project."

Juan C. García-Vizcaíno, General Manager of BanBif, commented:

¨This loan represents a milestone in our commitment to strengthening
collaboration and trust between the private banking sector and the extractive
resources industry. The recent formalization of the loan with PetroTal
reflects our shared dedication to a stronger and more sustainable energy
future. "

Rationale for the Term Loan

Although PetroTal remains well capitalized to execute its 2025 capital
program, which includes investments in erosion control infrastructure, the
Company has been evaluating alternate means of financing the project. PetroTal
sees the erosion control project as critical infrastructure that will ensure
the Company captures the full value of Bretana resource for years to come.
However, these costs are ultimately expected to be non-recurring, and the
Company acknowledges investor concerns that the project represents a drain on
near-term free cash flow. With that in mind, this loan essentially ring-fences
erosion control expenses within a credit facility, allowing PetroTal to repay
project costs over the next four years on favorable terms. There are no
material changes to cost estimates for the erosion control project at this
time; PetroTal continues to guide to total project costs of $65-75 million, of
which $35-40 million has been budgeted for 2025.

Additional Information on the Term Loan

The Term Loan is drawable in two tranches, the first for $50 million and the
second for $15 million. With the signing of the contract and the disbursement
documents, the amount of the first tranche will be deposited in the escrow
account, from which PetroTal will be able to withdraw amounts corresponding to
the disbursements already paid. The balance will be held in the escrow account
until it is withdrawn to fund cash expenses associated with the erosion
control project. The project will begin with the construction of breakwaters
1, 2, and 3, which are for the benefit of the community and in which COFIDE is
involved. The second tranche can be drawn within 18 months of the first
tranche and will come due at the same date. This is an amortizing term loan,
with a maturity date of April 2029. The loan is being extended to PetroTal's
Peruvian subsidiary, PetroTal Peru, with a parent guarantee in place.

The term loan carries a fixed annual interest rate of 8.65%, plus a 1.4%
structuring fee payable at loan execution. Key covenants include a liquidity
ratio greater than 1.2x, a debt ratio less than 2.0x, and a debt service
coverage ratio greater than 1.2x. Dividends may be distributed as long as this
does not lead to a breach of financial covenants.

ABOUT BANBIF

Banco Interamericano de Finanzas (BanBif) is one of Peru's leading private
banks, offering a comprehensive portfolio of financial services to
individuals, small and medium-sized enterprises (SMEs), and corporations.
Established in 1990 and headquartered in Lima, BanBif is a subsidiary of the
Spanish Fierro Group and ranks among the top five banks in Peru by market
share in loans and deposits. The bank is known for its customer-centric
approach, innovative financial solutions, and commitment to responsible
banking. BanBif actively supports sustainable development through its green
finance initiatives and maintains partnerships with global institutions such
as the International Finance Corporation (IFC). With a focus on transparency,
efficiency, and growth, BanBif continues to play a vital role in Peru's
financial ecosystem.

ABOUT COFIDE

COFIDE (Corporación Financiera de Desarrollo S.A.) is Peru's national
development bank, dedicated to promoting sustainable and inclusive economic
growth. Established in 1971, COFIDE plays a critical role in strengthening the
country's financial ecosystem by facilitating access to financing for micro,
small, and medium-sized enterprises (MSMEs), as well as supporting projects
aligned with environmental, social, and governance (ESG) principles. Through
strategic partnerships and innovative financial instruments-such as social and
thematic bonds-COFIDE drives investments in renewable energy, financial
inclusion, and climate resilience. The strategy is grounded in a triple bottom
line approach, aiming to create positive impacts across economic, social and
environmental dimensions, focused on closing gaps.

ABOUT PETROTAL

PetroTal is a publicly traded, tri‐quoted (TSX: TAL, AIM: PTAL and OTCQX:
PTALF) 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 the Bretaña Norte oil field in
Peru's Block 95, where oil production was initiated in June 2018.  In early
2022, PetroTal became the largest crude oil producer in Peru.  The Company's
management team has significant experience in developing and exploring for oil
in Peru and is led by a Board of Directors that is focused on safely and cost
effectively developing its portfolio of assets. It is actively building new
initiatives to champion community sensitive energy production, benefiting all
stakeholders.

For further information, please see the Company's website at
www.petrotal-corp.com (http://www.petrotal-corp.com) , the Company's filed
documents at www.sedarplus.ca (https://www.sedarplus.ca/landingpage/) , or
below:

 

Camilo McAllister

Executive Vice President and Chief Financial Officer

Cmcallister@PetroTal-Corp.com

T: (713) 253-4997

 

Manolo Zuniga

President and Chief Executive Officer

Mzuniga@PetroTal-Corp.com

T: (713) 609-9101

 

PetroTal Investor Relations

InvestorRelations@PetroTal-Corp.com

 

Celicourt Communications

Mark Antelme / Jimmy Lea

petrotal@celicourt.uk

T : +44 (0) 20 7770 6424

 

Strand Hanson Limited (Nominated & Financial Adviser)

Ritchie Balmer / James Spinney / Robert Collins

T: +44 (0) 207 409 3494

 

Stifel Nicolaus Europe Limited (Joint Broker)

Callum Stewart / Simon Mensley / Ashton Clanfield

T: +44 (0) 20 7710 7600

 

Peel Hunt LLP (Joint Broker)
Richard Crichton / Georgia Langoulant
T: +44 (0) 20 7418 8900

 

READER ADVISORIES

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: oil production levels
and production capacity; PetroTal's 2025 development program for drilling,
completions and other activities; plans and expectations with respect to the
erosion control project; and PetroTal's expectations with respect to dividends
and share buybacks. 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", "intend" and similar expressions. The forward-looking
statements provided in this press release are based on management's current
belief, based on currently available information, as to the outcome and timing
of future events. 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 ability of existing
infrastructure to deliver production and the anticipated capital expenditures
associated therewith, the ability to obtain and maintain necessary permits and
licenses, the ability of government groups to effectively achieve objectives
in respect of reducing social conflict and collaborating towards continued
investment in the energy sector, reservoir characteristics, recovery factor,
exploration upside, prevailing commodity prices and the actual prices received
for PetroTal's products, including pursuant to hedging arrangements, the
availability and performance of drilling rigs, facilities, pipelines, other
oilfield services and skilled labour, royalty regimes and exchange rates, the
impact of inflation on costs, the application of regulatory and licensing
requirements, the accuracy of PetroTal's geological interpretation of its
drilling and land opportunities, current legislation, receipt of required
regulatory approval, the success of future drilling and development
activities, the performance of new wells, future river water levels, the
Company's growth strategy, general economic conditions and availability of
required equipment and services. PetroTal cautions that forward-looking
statements relating to PetroTal are subject to all of the risks, uncertainties
and other factors, which may cause the actual results, performance, capital
expenditures or achievements of the Company to differ materially from
anticipated future results, performance, capital expenditures or achievement
expressed or implied by such  forward-looking statements. Factors that could
cause actual results to differ materially from those set forth in the
forward-looking statements include, but are not limited to, risks associated
with the oil and gas industry in general (e.g., operational risks in
development, exploration and production; delays or changes in plans with
respect to exploration or development projects or capital expenditures; the
uncertainty of reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; and health, safety and
environmental risks), business performance, legal and legislative developments
including changes in tax laws and legislation affecting the oil and gas
industry and uncertainties resulting from potential delays or changes in plans
with respect to exploration or development projects or capital expenditures,
credit ratings and risks,  fluctuations in interest rates and currency
values, changes in the financial landscape both domestically and abroad,
including volatility in the stock market and financial system, wars (including
Russia's war in Ukraine and the Israeli-Hamas conflict), regulatory
developments, commodity price volatility, price differentials and the actual
prices received for products, exchange rate fluctuations, legal, political and
economic instability in Peru, access to transportation routes and markets for
the Company's production, changes in legislation affecting the oil and gas
industry, changes in the financial landscape both domestically and abroad
(including volatility in the stock market and financial system) and the
occurrence of weather-related and other natural catastrophes. Readers are
cautioned that the foregoing list of factors is not exhaustive. Please refer
to the annual information form for the year ended December 31, 2023 and the
management's discussion and analysis for the three months ended March 31, 2024
for additional risk factors relating to PetroTal, which can be accessed either
on PetroTal's website at www.petrotal-corp.com (http://www.petrotal-corp.com/)
or under the Company's profile on www.sedarplus.ca
(https://www.sedarplus.ca/landingpage/) . 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.

 

OIL REFERENCES: All references to "oil" or "crude oil" production, revenue or
sales in this press release mean "heavy crude oil" as defined in National
Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI
51-101").

 

SHORT TERM RESULTS: References in this press release to peak rates, initial
production rates, current production rates, 30-day production rates and other
short-term production rates are useful in confirming the presence of
hydrocarbons, however such rates are not determinative of the rates at which
such wells will commence production and decline thereafter and are not
indicative of long-term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such rates in
calculating the aggregate production of PetroTal. The Company cautions that
such results should be considered to be preliminary.

 

FOFI DISCLOSURE: This press release contains future-oriented financial
information and financial outlook information (collectively, "FOFI") about
PetroTal's prospective results of operations and production results, 2024
drilling program and budget, well investment payback, cash position, liquidity
and components thereof, all of which are subject to the same assumptions, risk
factors, limitations and qualifications as set forth in the above paragraphs.
FOFI contained in this press release was approved by management as of the date
of this press release and was included for the purpose of providing further
information about PetroTal's anticipated future business operations. PetroTal
and its management believe that FOFI has been prepared on a reasonable basis,
reflecting management's best estimates and judgments, and represent, to the
best of management's knowledge and opinion, the Company's expected course of
action. However, because this information is highly subjective, it should not
be relied on as necessarily indicative of future results. PetroTal disclaims
any intention or obligation to update or revise any FOFI contained in this
press release, whether as a result of new information, future events or
otherwise, unless required pursuant to applicable law. Readers are cautioned
that the FOFI contained in this press release should not be used for purposes
other than for which it is disclosed herein. All FOFI contained in this press
release complies with the requirements of Canadian securities legislation,
including NI 51-101. Changes in forecast commodity prices, differences in the
timing of capital expenditures, and variances in average production estimates
can have a significant impact on the key performance measures included in
PetroTal's guidance. The Company's actual results may differ materially from
these estimates.

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