WTI (Feb) $80.04. +$2.54, Brent (Mar) $82.03 +$2.11, Diff -$1.99 -43c
USNG (Feb) $4.06 +9c, UKNG (Feb) 116.0p -4.2p, TTF (Feb) €45.95 -€1.17

Oil price

Oil has drifted today, the inventory stats were yet again mixed, a decent draw in crude but products added again, the underlying market, particularly in crude looks. tight enough to me. The ceasefire in Gaza has started and there are already signs of accusations of jiggery pokery…

PetroTal Corp

PetroTal has provided the following 2025 guidance update. All amounts are in US dollars unless stated otherwise.

2025 Guidance

• Target average 2025 production and sales of 21,000 – 23,000 barrels of oil per day, a ~24% increase on 2024
• Capital investment of $140 million, a decrease of approximately 14% on 2024
• Target annual EBITDA of $240 – 250 million at $75.00 Brent, net of $30 million expensed for non-recurring erosion control, a 6% increase on 2024
• Total of four development wells, down from seven in 2024
• Fully funded quarterly dividend of $0.015/share, consistent with 2024

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
“PetroTal is well positioned to build on the operational momentum that we established in 2024. We are firmly committed to a consistent return of capital policy, while maximizing the value of the Bretana oil field. We are one of very few companies in the oil and gas sector that can support a stable dividend while growing output by more than 20% year after year.

In addition to our active development programs at both the Bretana and Los Angeles fields, PetroTal is also expanding its exploration activities in the Ucayali Basin, where we recently secured an extension to our Block 107 license contract, and signed two new TEA’s adjacent to Block 131. Lastly, our budget also includes erosion protection measures for our key producing asset, a project that should be completed by the second quarter of 2026.

I would like to thank all of our stakeholders for their continued support. The PetroTal team has set ambitious goals for 2025, and we look forward to delivering for investors over the next twelve months.”

Yet again PetroTal has delivered the goods and then some. 2025 guidance is set at 21-23/- b/d which is up c.24% on what was a fantastic year by any standards. That gives revenue at $75 pb Brent crude of $438m and EBITDA of $240-250m which is up 6% but notably net of erosion funding costs of $30 taken as opex.

Capex will be down by some 14% to $140m but PTAL still has an incredible list of tasks, four development wells, down from seven, at Bretana and Los Angeles (using the new rig)  investment in the erosion control at Bretana and exploration in the Ucayali Basin. Also at Bretana CPF where the plan is to increase capacity to some 32/- b/d.

All this EBITDA and revenue means that the dividend is safe,  guidance here is for a ‘fully funded quarterly dividend of $0.015/share, consistent with 2024′ which cost $55m which right now sits the shares on a 13% yield. Depending on quarterly results, the oil price and the summer low levels of the river I would expect this number to rise and the ‘Company also intends to maintain its ongoing share buyback program’.

With the updated bucket list imminent it would be crazy not to include PetroTal, it is after all ‘one of very few companies in the oil and gas sector that can support a stable dividend while growing output by more than 20% year after year’. I would expect capital growth and with such income support these shares should be highly sought after, in M&A if not elsewhere. 

2025 Guidance Overview

PetroTal’s Board of Directors has approved a 2025 capital budget of $140 million, a decrease of approximately 14% compared to 2024. Key components of the capital program include:

• $55 million for drilling and workover activities, assuming a total of four development wells at the Bretana and Los Angeles oil fields
• $60 million for field infrastructure at Bretana, including upgrades to fluid handling capacity and new drilling cellars to facilitate continued expansion of the Bretana field
• $36.5 million for investments in erosion control measures at Bretana (allocated ~75% to opex)

These capital investments are expected to support 2025 annual average production in the range of 21,000 – 23,000 bopd, where the midpoint of 22,000 bopd implies growth of approximately 24% relative to 2024 annual average production of 17,733 bopd. Adjusted EBITDA and Funds Flow guidance assumes a 2025 annual average Brent oil price of $75.00/Bbl, a slight decrease relative to 2024 ($79.80/Bbl average). At the midpoint of production guidance (22,000 bopd), PetroTal expects to generate approximately $240-250 million Adjusted EBITDA, an increase of approximately 6% compared to 2024. However, it is important to note that 2025 Adjusted EBITDA guidance is net of approximately $30 million in non-recurring erosion control expenses that will be allocated to opex. Consistent with prior years, PetroTal has designed its capital program to provide a stable dividend and maintain minimum unrestricted cash liquidity of $60 million. 

Notes:

1. Royalties include 2.5% and 1.5% allocation to social trust funds for Bretana and Los Angeles, respectively.
2. Operating and Transportation expenses include approximately $30 million in non-recurring costs related to erosion control.
3. G&A expense includes cash variable compensation, mainly Peru mandatory profit sharing and non-cash equity compensation valued at approximately $11.5 million.
4. Tax Expense represents total 2025 accrued taxes. PetroTal expects to incur approximately $40 million in cash taxes in 2025.
5. Capex guidance includes approximately $8.5 million in capitalized costs related to erosion control.
6. Adjusted EBITDA, Funds Flow, Free Funds Flow: see disclaimers regarding non-GAAP financial measures.

Drilling & Facilities Investments

As previously disclosed with Q3 2024 financial results on November 14, 2024, PetroTal acquired a new drilling rig in October 2024. This rig is currently being imported to Peru, with the expectation that it will be moved to the Los Angeles field in Q2 2025 and commissioned by mid-year. PetroTal’s 2025 budget contemplates the drilling of a total of four development wells in both fields, with the last one to be completed in early 2026.

Major investments in field infrastructure include the expansion of fluid handling capacity at Bretana, where PetroTal is currently installing the fourth train of its central processing facility. This project will ultimately increase installed crude oil processing capacity to 32,000 bopd. The 2025 budget also includes upgrades to existing well cellars, along with the construction of new cellars for ten wells (pending approval of the updated EIA), which are expected to lay the foundation for PetroTal’s drilling program over the next two years.

Production & Sales Guidance

PetroTal’s 2025 production guidance of 21,000 – 23,000 bopd assumes that the current development drilling program at Bretana will wind down following the completion of well 23H, expected in late January. Flush production from wells 22H and 23H is expected to be sufficient to support production levels throughout H1 2025, in advance of the annual dry season which typically sets in by August. 2025 production guidance assumes dry season river levels similar to 2023, which was severe in a historical context, but represents a slight improvement compared to the record drought conditions experienced in 2024.

Although PetroTal continues to pursue new marketing strategies for its production, 2025 guidance assumes 10-15% of crude oil volumes are delivered to the Iquitos Refinery with the remainder going through the Brazil export route. The Company will update the market on any material developments in its marketing strategy as necessary.

Return of Capital Policy

PetroTal’s 2025 capital program gives top priority to the Company’s ongoing base dividend, which has an annual cash funding requirement of approximately $55 million, implying a dividend yield of 13% at the current share price. The Company also intends to maintain its ongoing share buyback program, which has cash funding requirements of approximately $0.2 million per month. As it has done in the past, PetroTal will consider dividend top up payments on a quarterly basis, consistent with the Company’s dividend policy.

Erosion Control Project

PetroTal will make significant advancements on its erosion control project in 2025. Consistent with previous disclosure, the project is expected to cost a total of $65-75 million, spread over the 2024-2026 period. In aggregate, project costs are expected to be split approximately 65/35 between opex and capex.

Total investment on erosion control in 2025 is expected to amount to $35-40 million, of which approximately 75% will be allocated to operating expenses. As previously disclosed in PetroTal’s Q4 2024 operations update on January 9, 2025, the company plans to expense approximately $10 million of steel components associated with the erosion control project with its Q4 2024 financial results. The balance of erosion control expenditures (approximately $15-20 million) will occur in 2026, by which time the costs will largely be allocated to capex. These measures, which are being conducted for the shared benefit of the Bretana community, are essential to ensure PetroTal retains the ability to capture value from the Bretana field for decades to come.

Exploration Activities

The 2025 capital program includes approximately $4 million for exploration activities, mainly to fund ongoing permitting and road construction at Block 107. As previously announced on January 9, 2025, PetroTal recently received an extension to the Fifth Exploration period of the Block 107 license contract, allowing ample time to pursue an exploration program at the Osheki-Kametza prospect.

The Company also intends to commence exploration activities on the recently acquired TEA’s XCVII and XCVIII, in the vicinity of Block 131. The acquisition of these TEA’s essentially reconstitutes the historical boundaries of the present-day Block 131, at no cost to PetroTal. A number of exploration prospects and leads have already been identified on existing 2D seismic coverage, on trend with the producing Los Angeles field and even Block 107. The TEA’s grant PetroTal the right to convert the acreage to exploration license contracts within the next two years, pending the completion of work commitments, which are mainly geological and geophysical studies.

At Block 95, PetroTal is currently evaluating a shift in its exploration strategy while awaiting EIA approval for its 2D seismic survey. As an alternative to the planned seismic program, the Company is exploring the possibility of a slim-hole exploration drilling program in 2026. This approach aims to de-risk the most promising structures south of the Bretana field by offering a faster, more cost-effective, and less invasive method for conducting exploration drilling in this remote location.

Updated Investor Presentation

PetroTal has updated its corporate investor presentation to reflect 2025 guidance. Please visit https://petrotalcorp.com/investors/ for more information.

Angus Energy

Fourth Quarter 2024 Production and Operations Update

• Production from the Saltfleetby Field in the Fourth Quarter of 2024 was 517 million standard cubic feet of natural gas and 9,387 barrels of gas condensate. In addition, the Brockham Field   produced 2,130 barrels of crude oil during the Quarter.
• Gas sales of 5.73 million therms were achieved in the Quarter from the Saltfleetby Field.
• Estimated revenues of £6.12m for the Quarter.
• Booster compressor shipped from the USA and expected to arrive on site during January 2025.

Gas sales from the Saltfleetby Field equalled 5.73 million therms in aggregate for the months of October, November and December 2024, compared to 5.85 million therms sold in the third quarter of 2024. Fourth quarter production equates to an average of 1.91mm therms per month (1.95 mm therms per month in the third quarter of 2024). Gas condensate (liquid) production averaged 102 bbl/day, against an average of 109 bbl/day in the third quarter 2024. Quarterly production reflects an improvement in plant uptime at Saltfleetby, with operational efficiency of 94% for the Quarter compared to 92% for the year, offsetting natural well decline.  

Estimated revenues of £6.12m are up c.19% compared to third quarter revenues of £5.14m, primarily due  to increased gas prices over the winter months. As previously announced, legacy hedging volumes, which are priced materially lower than current spot pricing, will remain at 1.25m therms per month until they roll off at the end of June 2025.

Oil volumes produced from the Brockham Field equalled 2,130 barrels in aggregate for the months of October, November and December 2024, an average of 23 bbl/day, compared to 1,995 for the third quarter of 2024 averaging 22 bbl/day. The field is capable of producing at a daily rate of 20-30 barrels from the single well on production, with the average quarterly volume reflecting stoppages for facilities maintenance and operational improvement work.

Booster Compressor Update

The new booster compressor was shipped from the USA in December 2024 and is scheduled to arrive in the UK in the next two weeks. It will be transported to Saltfleetby for installation and commissioning, with start-up planned for late first Quarter 2025. This compressor is planned to increase production through the ability to operate within a greater pressure range and will increase the ultimate recovery of gas from the reservoir.

Royalty Interest

As announced on 22 February 2024 at the time of Angus’s financial restructuring, there is an agreement with the royalty interest holders that until the end of the Second Quarter 2025, the royalty interest can either be settled in cash or through the issue of new ordinary shares in the Company at the Company’s option. Under existing arrangements and calculation methods the Company is required to issue 183,595,230 shares (or cash equivalent) in aggregate in settlement of the Q2 and Q3 2024 royalty interest. Angus intends to negotiate the timing of the settlement with the royalty interest holders and will provide an update accordingly.

This is another impressive update from Angus as the hydrocarbon flow from Saltfleetby continues, gas sales of 5.73 million therms were achieved in the quarter giving estimated revenues of £6.12m. The field is continuing to increase its operational efficiency which has risen to 94% in this quarter compared to 92% for the year, offsetting natural well decline.

These figures are before the addition of the new booster compressor which was shipped from the USA in December and scheduled to arrive on these shores in the next two weeks, It will be transported to Saltfleetby for installation and commissioning, with start-up planned for late first Quarter 2025. This compressor is planned to increase production through the ability to operate within a greater pressure range and will increase the ultimate recovery of gas from the reservoir.

I remain confident that Angus is delivering the goods and with current prices being so favourable it is one of few plays that enable investors to directly participate in the vital sales of gas and liquids into the ever more demanding domestic UK market. With modest amounts of oil from the Brockham field Angus is set fair for a good year ahead.

Petro Matad

Petro Matad has provided the following update on production operations at the Heron-1 well in its Block XX Production Sharing Contract area in eastern Mongolia and on the signing of a new Production Sharing Contract.

Highlights

• Heron-1 continues to flow oil to surface without the need for pumping.
• Produced oil is being transported and stored in the neighbouring Block XIX TA-1 facilities and to date 15,750 barrels have been delivered.
• Negotiations on the Cooperation Agreement are complete and it is now awaiting signature.
• Petro Matad has signed a new Production Sharing Contract (PSC) in Mongolia.

Heron-1 production

Production of oil from Heron-1 continues with the well on natural flow without the need for pumping. Stable production of over 200 barrels of oil per day is being maintained. At higher rates, reservoir sands are produced along with the oil and the installation of sand screens offers a cheap solution to this and will be programmed for the spring if the well continues to perform in this way. Surface modifications are also being reviewed with a view to capturing and using the associated gas that is produced along with the oil. The current inventory of Block XX oil in the TA-1 facilities in Block XIX stands at 15,750 barrels.

The terms of the Cooperation Agreement have been agreed by the parties involved and it is now awaiting signature by the operator of Block XIX. This is expected in February after which sales revenue will commence.

Under the Cooperation Agreement and applying the very favourable fiscal terms of the Block XX Production Sharing Contract, after payment of processing costs and transportation, and after the government’s royalty and production share are deducted, Petro Matad will receive a net back of more than $40 per barrel based on a sales price of $70 per barrel. Block XX crude will be sold at the same price as Block XIX crude which is Daqing 33 minus $1/barrel. Daqing 33 is usually priced at a small discount to Brent, presently a 3.3% discount. At current oil prices the Block XX crude already in storage will generate revenue net to Petro Matad of circa $600,000.

Signing of Borzon Block VII, a new Production Sharing Contract in Mongolia

As previously reported, Petro Matad was selected as the contractor for two new exploration areas in Mongolia and the PSC for one of these, Borzon Block VII, has now been signed. The Company holds this acreage through its Isle of Man registered subsidiary Petro Matad Energy Ltd. which was established specifically for this purpose. Signing of the second PSC is awaiting Cabinet approval of the coordinates of a small, reserved area within the block.

The map below shows the location of Block VII.

Petro Matad Limited (AIM: MATD), the AIM quoted Mongolian oil company, provides the following update on production operations at the Heron-1 well in its Block XX Production Sharing Contract area in eastern Mongolia and on the signing of a new Production Sharing Contract.

Highlights

• Heron-1 continues to flow oil to surface without the need for pumping.
• Produced oil is being transported and stored in the neighbouring Block XIX TA-1 facilities and to date 15,750 barrels have been delivered.
• Negotiations on the Cooperation Agreement are complete and it is now awaiting signature.
• Petro Matad has signed a new Production Sharing Contract (PSC) in Mongolia.

Heron-1 production

Production of oil from Heron-1 continues with the well on natural flow without the need for pumping. Stable production of over 200 barrels of oil per day is being maintained. At higher rates, reservoir sands are produced along with the oil and the installation of sand screens offers a cheap solution to this and will be programmed for the spring if the well continues to perform in this way. Surface modifications are also being reviewed with a view to capturing and using the associated gas that is produced along with the oil. The current inventory of Block XX oil in the TA-1 facilities in Block XIX stands at 15,750 barrels.

The terms of the Cooperation Agreement have been agreed by the parties involved and it is now awaiting signature by the operator of Block XIX. This is expected in February after which sales revenue will commence.

Under the Cooperation Agreement and applying the very favourable fiscal terms of the Block XX Production Sharing Contract, after payment of processing costs and transportation, and after the government’s royalty and production share are deducted, Petro Matad will receive a net back of more than $40 per barrel based on a sales price of $70 per barrel. Block XX crude will be sold at the same price as Block XIX crude which is Daqing 33 minus $1/barrel. Daqing 33 is usually priced at a small discount to Brent, presently a 3.3% discount. At current oil prices the Block XX crude already in storage will generate revenue net to Petro Matad of circa $600,000.

Signing of Borzon Block VII, a new Production Sharing Contract in Mongolia

As previously reported, Petro Matad was selected as the contractor for two new exploration areas in Mongolia and the PSC for one of these, Borzon Block VII, has now been signed. The Company holds this acreage through its Isle of Man registered subsidiary Petro Matad Energy Ltd. which was established specifically for this purpose. Signing of the second PSC is awaiting Cabinet approval of the coordinates of a small, reserved area within the block.

The map below shows the location of Block VII.

Block VII comprises a very large area of some 41,141 square kilometres and is located in the south of Mongolia adjacent to the Yin’e and other basins across the border in northern China where oil and gas have been found in several plays. Importantly, in addition to the Jurassic/Cretaceous play already well known in Mongolia, oil has been found in older Triassic and Permian reservoirs that so far have not been explored in Mongolia. It is the extension of these oil prone basins into Block VII that make this block technically very attractive. Block VII has previously been lightly explored by other operators and has some 2D seismic coverage and limited well data. Geological outcrop information is plentiful.

Contractual and fiscal terms are very attractive compared to most other international jurisdictions. The financial commitment on Block VII is very low as Petro Matad has been able to incorporate into the eight-year exploration term a phasing of the work programme and the spend with the option to continue or relinquish in part or in full at the end of each phase. This keeps the commitment spend low until prospectivity is determined and further expenditure is then supported. In the first two-year phase on Block VII, the agreed work programme comprises field mapping and related studies designed to mature areas for future seismic acquisition and/or drilling at the Company’s discretion in the following phases of the exploration term. The commitment spend for the first two-year phase including all PSC fees is $980,000 and overall expenditure under the contract for the full eight-year exploration period is $14.9 million.

The attractive risk profile, cheap operating environment and very low financial commitment make this block a good candidate for farmout and Petro Matad is prioritising the search for partners in parallel with the low cost exploration activities in phase 1 of the work programme. In-house technical work on Block VII has already commenced ahead of field work planned in Q2 2025.

Mike Buck, CEO of Petro Matad, said:
“We are very pleased to see Heron-1 maintaining production and showing potential to increase its flow rate with some low cost modifications. It is also good to see a sizeable inventory of Block XX oil accumulating at TA-1 and we are pushing for sign off on the Cooperation Agreement to trigger the start of sales revenue.

The signing of Block VII adds some high quality exploration acreage to our portfolio. The reward potential and risk profile that Block VII offers are very attractive and we hope to be able to bring in partners to join us in exploring this exciting new area. We are also hopeful that the signing of our next new PSC will follow shortly and I look forward to updating shareholders”.

With Heron-1 producing around 200 barrels a day of oil which is now the peak, into tanks at TA-1 and which now totals 15,750 barrels delivered and which with the Cooperation agreement just needs to be signed for the oil to be sold.

There is scope for growth from MATD as the terms are attractive and the exploration opportunities exist and as CEO Mike Buck states, they are hoping to sign another PSC soon leading to further growth so albeit slow progress,. progress it is.

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog