Business
PetroTal Announces Completion of Arrangement with Petroperu, and Two Year Extension of Oil Sales Contract
Update on Third-Party Sale of Shares Calgary, Alberta and Houston, Texas--(Newsfile Corp. - J...
About this update from Petrotal Corp.
[{"type":"text","content":"PetroTal Announces Completion of Arrangement with Petroperu, and Two Year Extension of Oil Sales ContractUpdate on Third-Party Sale of SharesCalgary, Alberta and Houston, Texas--(Newsfile Corp. - January 19, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) (\"PetroTal\" or the \"Company\") is pleased to announce that it has executed final agreements with PETROPERU S.A. (\"Petroperu\") to complete the restructuring (the \"Arrangement\") of the contingent liability referenced in PetroTal's June 12, 2020 press release and to extend the oil sales contract with Petroperu (\"Oil Sales Contract\") for an additional two years.HighlightsOil sales to Petroperu under the Oil Sales Contract for deliveries through the Northern Oil Pipeline (\"ONP\") have been extended for an additional two years beyond December 23, 2020;At PetroTal's expense, Petroperu will place commodity price hedges on all oil sold through the ONP, after the oil is delivered by PetroTal to Pump Station # 1 at Saramuro, which will substantially limit PetroTal's exposure to the impact of oil price fluctuations in the period until Petroperu ultimately sells the oil from the Bayovar port;The amount of the contingent liability at November 30, 2020 was $16.6 million. PetroTal will pay this amount to Petroperu over three years in equal monthly installments, with interest at an annual rate of 6.12%. The amount can be prepaid at any time, without penalty and is expected to be prepaid following successful completion of the contemplated bond issue announced on January 12, 2021;Based on the current Brent oil price forward curve, when the physical oil sales are arranged by Petroperu, which is expected over the next six months, this will result in PetroTal receiving payments from Petroperu totalling approximately $26.1 million; and,The Company continues to develop an alternative export route through to the Atlantic, based on the success of the first 106,000 barrel pilot in December 2020, and PetroTal has now arranged a second 200,000 barrel pilot in February 2021, FOB Bretana.ArrangementPursuant to the Arrangement, PetroTal and Petroperu have agreed to resolve the entire contingent liability that arose due to the significant reduction in oil prices in early 2020, on a one‐time basis that will result in the obligation being paid evenly over a three year period, together with intere...