Petrotal Corp. · TSX:TAL
Petrotal — Investor Presentation (January 2021)
42 slides from Petrotal's investor presentation, Jan 12, 2021
Slide 1: Investor Presentation
Investor Presentation 12 January 2021 Ticker TSXV: TAL AIM: PTAL 0
Slide 2: Investment highlights
Investment highlights 100% WI in the Bretaña field in Peru with 2P reserves1 of 47.7mmbbl (1P of 21.5mmbbl) Large producing 12,000 bopd of run rate production generates annual EBITDA of USD ~74m2 at Brent USD 45/bbl oil-field with robust cash-flow Resilient to oil price volatility - operating
Slide 3: PetroTal – Firmly established as a significant Peruvian oil producer
PetroTal – Firmly established as a significant Peruvian oil producer PetroTal in brief Asset and refinery locations ■ Pure-play onshore Peru focused E&P independent ECUADOR COLOMBIA Block 192 o Incorporated in Canada (Alberta), with offices in Houston and Calgary Block 8 o Listed on the TSX-V and AI
Slide 4: History and outlook
History and outlook 2017 H1 2019 H2 2019 Forecast 2021 December 2017 inception, Achieved ~5,500 bopd Exit 2019 production of 13,300 bopd Drilling four additional wells and capitalization and strategic (33% ahead of plan) one water disposal well asset acquisition of Gran Drilled three additional well
Slide 5: Strategy dedicated to low cost production growth from proven reserve base
Strategy dedicated to low cost production growth from proven reserve base Strategy and key principles Production growth to 20,000 bopd 39 48 2018 2019 Clear path to 20,000 bopd by September 2022 through operational excellence 23% growth Continued efficient reserves growth at Bretaña 2P Reserves in m
Slide 6: Senior management
Senior management Experienced and seasoned management team Manolo Zúñiga – Director, President & Chief Executive Officer • Native Peruvian with >30 years of experience in petroleum engineering • Started career with Occidental Petroleum Corp (“Occidental”) in Bakersfield & Block 192 in Peru • Founder
Slide 7: Board of directors
Board of directors Highly experienced governance1 Mark McComiskey – (Non-Executive Director and Chairman) • Founding Partner of Vanwall Capital and Managing Partner of Prostar Capital • Former Principal of Clayton, Dubilier & Rice, Inc. and an associate at the law firm of Debevoise & Plimpton, LLP G
Slide 8: Environmental, social and governance
Environmental, social and governance Empowering local communities and promoting sustainable development ENVIRONMENTAL SOCIAL GOVERNANCE Breteña pad – single well pad and no encroachment Projects to encourage and mentor sustainable Six full time CSR1 employees, five full time HSE2 on primary ra
Slide 9: Peru – country and fiscal overview
Peru – country and fiscal overview Peru offers a stable, low risk investment environment Peru’s GDP growth rate3 ■ Peru has averaged 4.7%/yr in GPD growth since 1998 8.3% ■ Investment grade stable/positive outlook: A3 (Moody’s)/BBB+ (S&P and Fitch) ■ Second lowest country risk in LatAm with a rating
Slide 10: Bretaña Field
Bretana Field @PetroTal °
Slide 11: Large producing reserve base
Large producing reserve base Bretaña (Block 95, 100% WI) - growing production base Reserves and production overview ■ Located in the Marañón Basin of northern Peru Reserves mmbbl1 Finding and Development USD m ■ 2P reserves of 47.7mmbbl (1P of 21.5mmbbl)1 Summary Summary 1P – 22 1P – 124 o 19° API h
Slide 12: 2P reserves based on highly conservative recovery factor vs analogue fields
2P reserves based on highly conservative recovery factor vs analogue fields Block 95 technical characteristics and analogue field recovery factors ■ Well defined four-way structure bounded by a reverse fault to the east – a geologic trap system that is very prolific and productive in both Peru and E
Slide 13: Strong production growth since inception
Strong production growth since inception Bretaña production and wells to date1, 2 - strong production growth Growth capital sources and uses to date 4H 5H 12,000 Production History 16/10/19 07/12/19 ■ USD 155m capex spent to Q4 2020 to reach a peak production of 13,300 bopd in ~two years (YE 2019) w
Slide 14: Development scope and schedule
Development scope and schedule Development schedule to end 2023 Key highlights ■ Low risk path to 20,000 bopd by September 2022 based on 20,000 18,000 Production bopd 2P reserves 16,000 Actuals o USD 155m spent through 2020 with a forecast additional USD 145m to be spent through prosposed 14,000 bon
Slide 15: Extensive infrastructure in place to facilitate production increases
Extensive infrastructure in place to facilitate production increases Existing facilities allow increased production ■ PetroTal has invested USD ~70m to achieve processing capacity of ~16,000 Incremental Oil Incremental Water Capacity Stage Complete bopd1 bopd bwpd ■ Continued ability to rapidly incr
Slide 16: Export routes
Export routes Multiple export routes preserving pricing optionality Export optionality Current export routes ■ First 1,300 bopd sold to Petroperu’s 10,000 bopd Iquitos refinery o Shortest route to market and potential for increase sales by improving our residual viscosity through blending or chemica
Slide 17: Alternative offtake option – up to 240k bbl export shipments via Brazil
Alternative offtake option – up to 240k bbl export shipments via Brazil Offtake option via Itacoatiara Brazil Bretaña Field Oil sold FOB Bretaña and transported with barges to Brazilian ports along Amazonas, 50k bbl storage capacity at Bretaña, reducing dependency on Peruvian infrastructure incr
Slide 18: Significant storage capacity and multiple offtake options mitigate ONP risk
Significant storage capacity and multiple offtake options mitigate ONP risk ~700k bbls storage capacity1-3 Multi-option offtake Storage # of days Cuml. # of days Access to: k bbl @ 12k bopd @ 12k bopd Brazilian optional route Bretaña Field 902 7.5 7.5 Main export route ONP Barges 1323 11.0 18.5 Mana
Slide 19: Financial Highlights
Financial Highlights @Petrotal
Slide 20: Financial summary
Financial summary Historical financial summary Financial highlights Units 2018 2019 Q1-3 2020 Since first oil in June 2018, production has grown to 13,300 bopd (exit rate 2019) Production (gross) bopd 958 4,131 5,438 Bbls sold bbls 177,465 1,472,042 1,582,858 2020 YE cash of USD 10m Revenue USDm
Slide 21: Bretaña offers strong netbacks
Bretaña offers strong netbacks Netbacks and netback sensitivity Netback highlights Bretaña illustrative netbacks Bretaña netback sensitivity Break even oil price (Brent) of USD ~24/bbl pre G&A (USD ~27/bbl post G&A) 12,000 12,000 12,000 Netback (USD/bbl) at o G&A run rate at USD 2.5/bbl Netback De
Slide 22: Strong free cash flow generation during bond financing tenor
Strong free cash flow generation during bond financing tenor Cash flow pre-debt service and cost breakdown (USDm) Financial projection highlights 60 Free cash flow positive at USD 45/bbl Brent 53 CAPEX 50 48 48 OPEX o Three-year EBITDA of USD 253m over bond 50 45 14 38 Revenue (net of royalties an
Slide 23: Strong financial position post bond financing
Strong financial position post bond financing Strong pro-forma financial position Material free cash generated at USD 45/bbl2,3 (USDm) 350 Proposed bond financing to repay Petroperu facility and finance further development of the producing Bretaña field o Will provide funds to develop Bretaña with
Slide 24: Financial highlights
Financial highlights First oil in H1 2018 reached five months ahead of time and significantly below budget Proven ability to execute Increased Bretaña production from 1,000 bopd to 13,300 bopd in 18 months from mid-2018 Drilled six wells on budget and on time, consistently with better than exp
Slide 25: Exploration Upside
Exploration Upside @PetroTal *
Slide 26: Block 95 – further growth opportunities
Block 95 – further growth opportunities Key highlights Prospects and leads diagram ■ Several prospects and leads identified, most on trend with Bretaña Field ■ Leads are very similar to Bretaña and other producing fields in the basin which follow the same geological pattern observed in the block. Ac
Slide 27: Block 107 – significant exploration opportunity
Block 107 – significant exploration opportunity Block 107 Constitución prospect ■ 100% owned and operated block, located in the Ucayali basin ■ Due to location adjacent to a new road, drilling cost is estimated to USD 20m, well below the USD 40m estimated for the larger Osheki prospect ■ Significant
Slide 28: Appendix
Appendix @PetroTal 7
Slide 29: Sales process overview and contract highlights
Sales process overview and contract highlights Crude oil sales and transportation contract Sales process overview under Petroperu Oil Sales Agreement On 12 June 2020, PetroTal announced an extension of its Oil Sales Agreement with ■ The crude oil ownership and associated risk are transferred to Pe
Slide 30: Derivative liability – to be repaid through bond financing
Derivative liability – to be repaid through bond financing Bretaña derivative liability Derivative liability details Invoiced ■ The derivative liability is a consequence of PetroTal’s sales Delivery Production Delivered (bbl) Brent Price (USD/bbl) Liability/(Asset) (USDm) (USD/bbl) agreement with Pe
Slide 31: Hedging considerations and strategy
Hedging considerations and strategy Overview ■ Immediately upon closing of the bond financing issue, PetroTal plans to implement a hedge program for the next 12 months with a focus on i) protecting the USD 99m capital program for 2021 and ii) ensure compliance with covenants should Brent drop materi
Slide 32: Introduction to commercial agreements with Petroperu
Introduction to commercial agreements with Petroperu ■ Bretaña crude oil has two main commercial markets and export routes with Petroperu as counterparty: Iquitos Refinery and Bayovar Terminal through the Northern Oil Pipeline (ONP) and PetroTal has in this respect entered into three commercial cont
Slide 33: Oil Sales Commercialization Agreements with Petroperu
Oil Sales Commercialization Agreements with Petroperu Key Terms Key Agreements Petroperu Oil Sales Agreement PetroTal has provided security to Petroperu for the historic liability that has accrued under the Petroperu Oil Sales Agreement and Petroperu Oil Transportation Agreement - this security
Slide 34: Government long-term solution to Covid-19 and related social unrest issues
Government long-term solution to Covid-19 and related social unrest issues Export pipeline and production shut-in Government long-term solution to related social unrest issues ■ Export pipeline shut-in from early May 2020 due to Covid-19 measures ■ During the past five months the Government made fiv
Slide 35: COVID-19 surveillance and control plan
COVID-19 surveillance and control plan Key highlights Proactive approaches to COVID 19 mitigation ■ Rapid Testing Pre and Post Camp Entrance On-site clinic o Multiple COVID-19 tests required one week and one day prior to entering camp o 146 workers are continuously tested every five days o Numerous
Slide 36: Transparency, responsibility and empowerment
Transparency, responsibility and empowerment Key highlights Empowering the community ■ Sharing Information to build trust and responsibility to become fully empowered o Training of the Bretaña Municipality to properly manage the cash provided by the CANON1 o Training 21 local leaders to be able to p
Slide 37: Empowering the communities
Empowering the communities Key highlights Empowering the community ■ Sustainable local economic development: key for the communities not to depend on oil industry o Construction of the Bretaña community dock that was promised by the previous operator o Development of sustainable fishing projects o H
Slide 38: Disclaimers
DISCLAIMERS Forward-Looking Information Certain information included in this presentation constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”,
Slide 39: Disclaimers (continued)
DISCLAIMERS (CONTINUED) Oil and Gas Advisories Crude Oil. All references to “oil” or “crude oil” production, revenue or sales mean “heavy crude oil” as defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Reserves Disclosure. The reserve estimates
Slide 40: Disclaimers (continued)
DISCLAIMERS (CONTINUED) Analogous Information. Certain information in this document may constitute "analogous information" as defined in NI 51-101, including, but not limited to, information relating to areas, wells and/or operations that are in geographical proximity to or on-trend with lands held
Slide 41: Disclaimers (continued)
DISCLAIMERS (CONTINUED) Non-GAAP Financial Measures, Oil and Gas Metrics and Other Key Performance Indicators This presentation contains certain financial measures, as described below, which do not have standardized meanings prescribed by generally accepted accounting principles (“GAAP”). In additio
Slide 42: Contact
Ltd. Manolo Zuniga Douglas Urch (713) 609-9101 (713) 609-9026 mzuniga@petrotal-corp.com durch@petrotal-corp.com PetroTal Suite 500 11451 Katy Freeway Houston, TX 77079 Legal Counsel (Canada): Stikeman Elliott LLP Independent Reservoir Engineering Firm: Netherland Sewell & Associates, Inc. Audit Firm