CALGARY and HOUSTON, July 3,
2018 /CNW/ - PetroTal Corp. ("PetroTal" or the
"Company") (TSX-V: TAL) is pleased to announce that it has
achieved first oil production from the Bretana Norte discovery well
(the "Discovery Well" or the "well") at the Bretana field in Block
95 in Peru. The Company is also
pleased to provide further operations updates for both Bretana and
Block 107. All figures referred to in this press release are
denominated in U.S. dollars.
Operations Highlights
- First oil production achieved in five months, significantly
ahead of schedule
- Discovery well flowed oil without stimulation
- Well produced 100 percent oil with minimal natural gas and no
formation water to date
- Commissioning of facilities is progressing as expected and on
schedule
- Water handling facilities on schedule for commissioning in
October, 2018
- 7,000 barrels of oil produced to date through the ongoing
long-term testing phase
- Signed oil sales contract allows for strong operating netbacks
to PetroTal
- First oil sales and shipment expected in early July, 2018
- Osheki prospect in Block 107 remapped, independent resource
audit being prepared
Operations Update
The Company initially provided guidance that the Discovery Well,
which had been tested but not produced, could commence production
in 10 to 12 months from PetroTal taking over operational control of
the field in late December 2017. The Company is pleased to
announce that on June 1, 2018 the
well was placed on production through long-term testing, allowing
for the start of the commissioning of the newly installed oil
production facilities, five months earlier than anticipated.
Field personnel have controlled the choke sizes of the well
over the initial four weeks to carefully manage the
commissioning of the facilities and to properly commission the
facilities. The Discovery Well is testing oil from the Vivian
formation, producing 100 percent oil with minimal natural gas and
no formation water. As previously announced, the Company is
restricting the well flow rates to avoid water production until the
required water injection facilities are installed and commissioned
in October of this year.
In addition to putting the Discovery Well on production, the
Company is installing initial water handling facilities at
Bretana. The project is on schedule to begin commissioning
water treatment and reinjection facilities by late October
2018. At that time, oil production rates from the Discovery
Well are anticipated to increase to between 2,000 and 2,300 barrels
per day ("Bbls/d"). The Company has also completed
refurbishment and construction on the existing drilling pad and is
now able to drill additional wells without causing material
interruptions to production.
Manolo Zuniga, President and
Chief Executive Officer of PetroTal, stated: "We are extremely
pleased for having been able to achieve first production in just
five months. The well and the newly installed equipment have
met expectations of field personnel and there have been no issues
with achieving oil flow at sufficient rates to commission
equipment. As mentioned above, the well is being produced
under a restricted choke to avoid producing water until the full
facilities are installed to handle produced water in October of
this year. In the meantime, the well is expected to produce
without stimulation at rates of up to 1,000 Bbls/d, depending on
the planned activities and objectives of field personnel, gather
well and reservoir data, and meet the requirements of the initial
oil sales contract which calls for PetroTal to sell up to 1,000
Bbls/d to the Iquitos refinery."
Oil Sales Contract
The Company is pleased to announce the execution of an initial
oil sales contract with PetroPeru, Peru's state oil company and owner of the
Iquitos refinery, pursuant to which the Company is entitled to sell
up to 1,000 Bbls/d to the refinery during the initial long-term
testing phase. The Company successfully negotiated a discount
equivalent to 14 percent from Brent; however, the Company does not
pay pipeline tariffs during the contract term as all oil is barged
to the refinery. Additionally, the crude oil will be picked
up at the Bretana field and transported to the refinery by
PetroPeru at a cost equivalent to our internal cost
projections. As a result, the Company expects to achieve
strong operating netbacks. The Company expects to deliver
most of the initial oil recovered to date to the refinery in early
July. The chart below outlines the Company's anticipated
operating netbacks at certain benchmark reference prices:
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|
|
|
|
|
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Benchmark Brent
Prices
|
$60.00
|
$65.00
|
$70.00
|
$75.00
|
$80.00
|
$85.00
|
|
|
|
|
|
|
|
Realized
Price
|
$51.44
|
$55.73
|
$60.02
|
$64.31
|
$68.59
|
$72.88
|
|
|
|
|
|
|
|
|
|
Royalty
|
$2.57
|
$2.79
|
$3.00
|
$3.22
|
$3.43
|
$3.64
|
|
Barging
|
$5.50
|
$5.50
|
$5.50
|
$5.50
|
$5.50
|
$5.50
|
|
Pipeline
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0
|
0
|
0
|
0
|
0
|
0
|
|
Lifting
|
$21.95
|
$21.95
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$21.95
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$21.95
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$21.95
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$21.95
|
|
|
|
|
|
|
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Operating
Netback
|
$21.42
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$25.49
|
$29.57
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$33.64
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$37.71
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$41.79
|
The higher per unit lifting costs included above are driven by
the initial lower production rates during the initial commissioning
and testing phase. The Company expects future lifting costs
to approximate $11.00 per barrel
("Bbl") once production reaches 5,000 Bbls/d.
Mr. Zuniga continued "As demonstrated, the avoidance of paying
the pipeline tariff effectively reduces our cost structure, thus
the negotiated 14 percent discount is beneficial for both PetroTal
and PetroPeru, the owner of the Iquitos refinery. We use a
lifting cost of $21.95 per Bbl on
this initial production as the early restriction on production
rates affect the unit costs. Additionally, we have yet to
finalize the commissioning process, so this initial estimate could
vary. In any event, you can see that this is a robust
project."
Block 107 Osheki Prospect
The Company has completed the remapping of the Osheki prospect
based on all available data. The revised maps suggest there
is closure on the structure and up to three producing horizons may
hold hydrocarbons. Updated maps are available in the investor
presentation on the Company's website
at www.petrotal-corp.com.
In addition, the Company has retained Netherland, Sewell &
Associates, Inc., qualified independent reserves evaluators, to
prepare an initial hydrocarbons volumes assessment of the Osheki
prospect. Once this assessment is complete, the Company
expects to open the Block 107 data room for prospective partners to
review.
ABOUT PETROTAL
PetroTal is a publicly-traded oil and gas development and
production company domiciled in Calgary,
Alberta, focused on the development of oil assets in
Peru. The Company's management team has significant
experience in developing oil fields in Northern Peru and is led by an independent
Board of Directors that is focused on safely and cost effectively
developing and exploiting the Bretana oil field.
READER ADVISORIES
FORWARD-LOOKING STATEMENTS: This press release may contain
certain statements that may be deemed to be forward-looking
statements. Such statements relate to possible future events,
including, but not limited to: the Company's objectives; drilling,
reactivation, water and other activities and the anticipated costs
and results of such activities, including with respect to the
Discovery Well; cost controls and savings; anticipated future
production and revenue, including resulting from sales to
PetroPeru; future development and growth prospects, including
identifying a joint venture partner to develop the Osheki
prospect. 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 ability of existing infrastructure, including the
Refinery, to deliver production and the anticipated capital
expenditures associated therewith, reservoir characteristics,
recovery factor, exploration upside, prevailing commodity
prices and the actual prices received for PetroTal's products, the
availability and performance of drilling rigs, facilities,
pipelines, other oilfield services and skilled labour, royalty
regimes and exchange rates, 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, the Company's growth strategy, general economic
conditions, availability of required equipment and services and
prevailing commodity prices. 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 and 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. Please
refer to the risk factors identified in the Company's annual
information form and management's discussion and analysis for the
year ended December 31, 2017 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.
OIL AND GAS INFORMATION: This press release contains metrics
commonly used in the oil and natural gas industry, such as
operating netbacks (calculated on a per unit basis as oil revenues
less royalties and barging, pipeline and lifting costs). 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. All oil
and gas disclosure contained in this press release complies with
the requirements of National Instrument 51-101 – Standards of
Disclosure for Oil and Gas Activities ("NI 51-101").
References in this press release to production test rates,
initial test 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 for PetroTal. A
pressure transient analysis or well-test interpretation has not
been carried out in respect of all wells. Accordingly, the Company
cautions that the test 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, operating netbacks, operating costs 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 made as of the
date of this press release and was provided for the purpose of
providing further information about PetroTal's anticipated future
business operations. 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.
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.
SOURCE PetroTal Corp.