REG - PetroTal Corp. - Q4 and 2023 Financial and Operating Results
21/03/2024 07:00
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RNS Number : 7558H PetroTal Corp. 21 March 2024
PetroTal Announces Q4 and 2023 Financial and Operating Results
Q4 2023 average sales and production of 15,033 bopd and 14,865 bopd,
respectively
2023 average year on year production growth of 17% to 14,248 bopd
Generated 2023 free funds flow of $91 million
Returned over $61 million through dividends and share buybacks in 2023
2023 Return on Capital Employed of 30%
Calgary, AB and Houston, TX - March 21, 2024-PetroTal Corp. ("PetroTal" or the
"Company") (TSX: TAL, AIM: PTAL and OTCQX: PTALF) is pleased to report its
operating and audited financial results for the three ("Q4") and twelve months
ended December 31, 2023 ("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 ("MD&A") 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 ("bbls")
of oil per day ("bopd"), 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 ("capex") 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 EBITDA(2) and free funds flow(2) 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."
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 acheived, 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.
Q4 and 2023 full year webcast link for March 21, 2024
PetroTal will host a webcast for its Q4 2023 and 2023 full year results on
March 21, 2024 at 9am CT (Houston). Please see the link below to register.
https://stream.brrmedia.co.uk/broadcast/65d6373035af67d51a41b45b
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 Bretana 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 the Bretana oil field. 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
(file:///C:/Users/Kfami/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/AOA4GGX0/www.sedarplus.ca)
, or below:
Douglas Urch
Executive Vice President and Chief Financial Officer
Durch@PetroTal-Corp.com
T: (713) 609-9101
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 / David McKeown / 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 guidance. 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. Without limitation, this press
release contains forward-looking statements pertaining to: PetroTal's
drilling, completions, workovers and other activities; the Company's plans and
expectations with respect to the OCP pilot oil shipment and its continued
advancement; anticipated future production and revenue; drilling plans
including the timing of drilling, commissioning, and startup; PetroTal's 2024
guidance, including in respect of its production and sales target of 17,000
bopd and estimate that it will deliver a 20% growth rate over 2023 production
and anticipated benefits thereof (i.e., that PetroTal will generate
approximately $200 million in EBITDA as a result, underpinned by a total 2024
capex spend of $134 million and allowing for a stable return of capital
program and shareholder return upside); expectations with respect to well 17H
production; 2024 budget guidance; plans with respect to well 18H including
in respect of anticipated costs, completion and timing thereof including the
Company's plans to begin production at well 18H in May of 2024; the Company's
expectation to meet Q1 2024 production guidance of 18,500 bopd; expectation
that the Company will continue to prioritize derisking oil sales so it can
embark on new production growth projects; average 2024 production; intentions
with respect to return of capital and the 19 year 2P reserve life index. In
addition, statements relating to expected production, reserves, recovery,
replacement, costs and valuation are deemed to be forward-looking statements
as they involve the implied assessment, based on certain estimates and
assumptions that the reserves described can be profitably produced in the
future. 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. 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. These 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), 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 and uncertainties resulting
from potential delays or changes in plans with respect to exploration or
development projects or capital expenditures; changes in the financial
landscape both domestically and abroad, including volatility in the stock
market and financial system; and wars (including Russia's war in Ukraine and
the Israeli-Hamas conflict). Please refer to the risk factors identified in
the Company's most recent annual information form and MD&A which are
available on SEDAR+ at www.sedarplus.ca. 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 NI 51-101.
All references to Brent indicate Intercontinental Exchange ("ICE") Brent.
Recovery factor percentages include historical production.
RESERVES DISCLOSURE: All reserves values, future net revenue and ancillary
information contained in this press release are derived from from an
independent reserves report prepared by Netherland, Sewell & Associates,
Inc. ("NSAI") effective December 31, 2023 unless otherwise noted. Estimates of
reserves and future net revenue for individual properties may not reflect the
same level of confidence as estimates of reserves and future net revenue for
all properties, due to the effect of aggregation. There is no assurance that
the forecast price and cost assumptions applied by NSAI in evaluating
PetroTal's reserves will be attained and variances could be material. It
should not be assumed that the estimates of future net revenues presented in
the tables below represent the fair market value of the reserves. The recovery
and reserve estimates of PetroTal's oil reserves provided herein are estimates
only and there is no guarantee that the estimated reserves will be recovered.
Actual oil reserves may be greater than or less than the estimates provided
herein. There are numerous uncertainties inherent in estimating quantities of
crude oil, reserves and the future cash flows attributed to such reserves. The
reserve and associated cash flow information set forth herein are estimates
only. Proved reserves are those reserves that can be estimated with a high
degree of certainty to be recoverable. It is likely that the actual remaining
quantities recovered will exceed the estimated proved reserves. Probable
reserves are those additional reserves that are less certain to be recovered
than proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the estimated
proved plus probable reserves. Proved developed producing reserves are those
reserves that are expected to be recovered from completion intervals open at
the time of the estimate. These reserves may be currently producing or, if
shut-in, they must have previously been on production, and the date of
resumption of production must be known with reasonable certainty. Possible
reserves are those reserves expected to be recovered from known accumulations
where a significant expenditure (e.g., when compared to the cost of drilling a
well) is required to render them capable of production. They must fully meet
the requirements of the reserves category (proved, probable, possible) to
which they are assigned. Certain terms used in this press release but not
defined are defined in NI 51-101, CSA Staff Notice 51-324 - Revised Glossary
to NI 51-101, Revised Glossary to NI 51-101, Standards of Disclosure for Oil
and Gas Activities ("CSA Staff Notice 51-324") and/or the COGEH and, unless
the context otherwise requires, shall have the same meanings herein as in NI
51-101, CSA Staff Notice 51-324 and the COGEH, as the case may be.
SHORT TERM RESULTS: References in this press release to peak rates, production
rates since inception, current production rates, initial seven 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.
SPECIFIED FINANCIAL MEASURES: This press release includes various specified
financial measures, including non-GAAP financial measures, non-GAAP financial
ratios and capital management measures as further described herein. These
measures do not have a standardized meaning prescribed by generally accepted
accounting principles ("GAAP") and, therefore, may not be comparable with the
calculation of similar measures by other companies. Management uses these non-
GAAP measures for its own performance measurement and to provide shareholders
and investors with additional measurements of the Company's efficiency and its
ability to fund a portion of its future capital expenditures. "Adjusted
EBITDA" (non-GAAP financial measure) is calculated as consolidated net income
(loss) before interest and financing expenses, income taxes, depletion,
depreciation and amortization and adjusted for G&A impacts and certain
non-cash, extraordinary and non-recurring items primarily relating to
unrealized gains and losses on financial instruments and impairment losses,
including derivative true-up settlements. PetroTal utilizes adjusted EBITDA as
a measure of operational performance and cash flow generating capability.
Adjusted EBITDA impacts the level and extent of funding for capital projects
investments. Reference to EBITDA is calculated as net operating income less
G&A. "Net Operating Income" (non-GAAP financial measure) is calculated as
revenues less royalties, operating expenses, and direct transportation. The
Company considers Net Operating Income measure as they demonstrate Company's
profitability relative to current commodity prices. "Net surplus (debt)"
(non-GAAP financial measure) is calculated by adding together total cash,
trade and VAT receivables, and short and long-term net derivative balances
less total current liabilities, long-term debt, non-current lease liabilities,
deferred tax, and other long-term obligations. Net surplus (debt) is used by
management to provide a more complete understanding of the Company's capital
structure and provides a key measure to assess the Company's liquidity. "Free
funds flow" (non-GAAP financial measure) is calculated as net operating income
less G&A less exploration and development capital expenditures less
realized derivative gains/losses and is calculated prior to all debt service,
taxes, lease payments, hedge costs, factoring, and lease payments. Management
uses free funds flow to determine the amount of funds available to the Company
for future capital allocation decisions. Please refer to the MD&A for
additional information relating to specified financial measures. "Free cash
flow" (non-GAAP financial measure) is calculated as EBITDA less G&A less
Capex prior to the realization of any derivative impacts.
OIL AND GAS MEASURES: This press release contains metrics commonly used in the
oil and natural gas industry which have been prepared by management, such as
"reserves life index", "reserves replacement" and "per share reserves value".
These terms do not have a standardized meaning and may not be comparable to
similar measures presented by other companies, and therefore should not be
used to make such comparisons. "Reserve life index" is calculated as total
Company interest reserves divided by annual production. "Reserves replacement"
is calculated as reserves in the referenced category divided by estimated
referenced production. "Reserves per share" or "per share reserves value" is
calculated as reserves in the referenced category divided by the number of
shares of PetroTal's common stock issued and outstanding. These terms have
been calculated by management and do not have a standardized meaning and may
not be comparable to similar measures presented by other companies, and
therefore should not be used to make such comparisons. Management uses these
oil and gas metrics for its own performance measurements and to provide
shareholders with measures to compare PetroTal's operations over time. Readers
are cautioned that the information provided by these metrics, or that can be
derived from the metrics presented in this press release, should not be relied
upon for investment or other purposes.
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, free
funds flow, cost estimates, NPV10, tax rates, budget, EBITDA, 2024 capex, 2024
average production and production and sales targets, balance sheet strength,
shareholder returns 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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