PetroTal, an oil and gas company, has set ambitious targets for 2024, projecting higher oil production compared to previous years. With an investment of $107 million in the Bretana oil field in Peru, the company aims to expand its operations and maximize potential revenue.
Revenue and Financial Outlook:
- PetroTal expects to generate a revenue of $360 million in 2024.
- The company anticipates an operating income of $230 million.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to be $200 million.
- PetroTal anticipates a free cash flow of $25 million.
Production Forecast:
PetroTal has set a target of producing and selling an average of 17,000 barrels of oil per day throughout 2024, representing a 20% year-on-year growth. The production forecast assumes a dry season similar to 2023, with varying quarterly profiles as follows:
- First Quarter: 18,500 barrels of oil per day (BO/d)
- Second Quarter: 19,000 BO/d
- Third Quarter: 13,000 BO/d
- Fourth Quarter: 17,500 BO/d
Exploration and Expansion Efforts:
The company plans to conduct pilot sales shipments to the OCP (crude oil pipeline) in Ecuador. This includes 200,000 barrels of oil initially, with recurring sales of 2,000 BO/d expected to commence in the fourth quarter.
Capital Expenditure and Development:
PetroTal intends to invest $107 million in the Bretana oilfield. This investment will primarily focus on drilling three new oil wells and expanding the infrastructure in line with the field’s development plan. The company also acknowledges the flexibility for reducing expenditure if lower Brent oil prices prevail.
In addition, PetroTal has allocated $12 million for a seismic program in block 95, aimed at validating internal oil migration models south of the Bretana oilfield. The results of this program could potentially identify multiple commercial fields within block 95, some of which may be comparable in size to Bretana.
PetroTal’s strategic plans reflect their commitment to continued growth and exploration, positioning the company for success in the competitive oil and gas industry.
Drilling Update
Allocation of Funds
Approximately $2 million will be allocated to block 107 for required permitting as the company progresses partnership discussions for this block.
Planned Wells
In 2024, following the successful completion of the 16H oil well, the company is set to drill and complete three additional oil wells. These wells, named 17H, 18H, and 19H, will be drilled consecutively in the first, second, and third quarters, respectively. The estimated cost for drilling these wells is approximately $50 million.
Performance and Assessment
Well 16H has been operational and has displayed promising performance, averaging around 7,500 barrels of oil per day in the first week. It is projected to reach payback by the end of the first quarter of 2024. The company expects this well to meet or slightly exceed its performance expectations.
Drilling for well 17H commenced on January 12 and is expected to be completed by the end of March.
Shareholder Returns
Monthly Share Buyback Program
The company plans to continue its monthly share buyback program at an approximate rate of $1.0 million per month.
Dividend Policy
PetroTal intends to maintain its base quarterly dividend of $0.015 per share and anticipates making additional dividend top-up payments based on declaration dates, in accordance with the company’s dividend policy.
Estimated Returns
Based on a market capitalization of approximately $550 million, the company’s projected returns from its 2024 dividend and buyback plan are estimated to yield a 12% return prior to any additional liquidity sweep enhancements.
