Petrotal Corp. · TSX:TAL
Petrotal — Investor Presentation (August 2021)
41 slides from Petrotal's investor presentation, Aug 26, 2021
Slide 1: Investor Presentation
Investor Presentation August 26, 2021 (In USD) Ticker TSXV: TAL AIM: PTAL 0
Slide 2: PetroTal is a significant Peruvian oil producer
PetroTal is a significant Peruvian oil producer PetroTal corporate and technical summary Asset and refinery locations Corporate (in millions) and USD ECUADOR COLOMBIA Public share exchange (Tal and Ptal) TSX-V and AIM Block 192 Basic shares 819 Block 8 Fully diluted shares 932 Iquitos Market capital
Slide 3: Low cost production growth from a proven reserve base
Low cost production growth from a proven reserve base Strategy and key principles Reserves in mmbbl1 106 Production growth to 20,000 bopd 85 79 Possible 55 Possible 37 Clear path to 20,000 bopd through operational excellence 39 2P 48 2P 51 39 Continued efficient reserves growth at Bretaña 2018 2019
Slide 4: Investment highlights
Investment highlights Large producing ▪ 100% WI in the Bretaña field in Peru with 2P reserves1 of 51 mmbbl with a before tax 2P NPV(10%) of $830 million oil field with ▪ 10,500 bopd of run rate production generates annual EBITDA of ~$128 million2 at Brent $65/bbl robust cash flow ▪ Resilient to oil
Slide 5: History and outlook
History and outlook 2017 H1 2019 H2 2019 H1 2021 H2 2021 Budget Achieved ~5,500 bopd Exit 2019 production of 13,300 bopd Drilled well 7D in April 2021, Commence drilling three additional December 2017 inception, (33% ahead of plan) initially producing at >4,000 bopd development wells with two on cap
Slide 6: Environmental, social and governance summary
Environmental, social and governance summary Empowering local communities and promoting sustainable development ENVIRONMENTAL SOCIAL GOVERNANCE ▪ Breteña pad – single well pad and no encroachment ▪ Projects to encourage and mentor sustainable ▪ Six full time CSR1 employees, five full time HSE2 on pr
Slide 7: 2020 sustainability highlights
2020 sustainability highlights Ethics Health & Safety Social Environment ▪ Various claims channels ▪ Strict COVID-19 protocols ▪ Hire local ▪ Carbon monitoring quality certificate obtained with ▪ Policy driven approaches to: ▪ Extensive H&S training for ▪ Perception assessments ongoing reduction pla
Slide 8: Peru – country and fiscal overview
Peru – country and fiscal overview Peru offers a stable, low risk investment environment Three year GDP growth rates by country1,4 Peru Argentina Uruguay Chile Colombia Mexico Paraguay Brazil ■ Investment grade stable/positive outlook: A3 (Moody’s)/BBB+ (S&P and Fitch) 12% 2019 2020 2021 ■ Lowest co
Slide 9: Bretaña Field
Bretana Field @PetroTal *
Slide 10: Large producing and growing reserve base
Large producing and growing reserve base Bretaña (Block 95, 100% WI) - growing production base Reserves and production overview ■ Located in the Marañón Basin of northern Peru 2020 Reserves mmbbl1 Finding and Development ($ millions) Summary Summary 1P – 22 1P – 119 ■ 2020 2P reserves at 51 mmbbl1 (
Slide 11: Strong production growth since inception
Strong production growth since inception Bretaña production and wells to date1, 2 - strong production growth profile Strong overall performance (2018 – June 30, 2021) 12,000 5H ▪ Over 5 million barrels sold Date wells 07/12/19 commenced production 4H ▪ ~$184 million in total historical CAPEX deploye
Slide 12: Well performance
Well performance Production contribution Key highlights 1,200 ▪ PetroTal horizontal wells have produced an average of almost 1 million bbls in first 580 days Cuml. Oil vs Days Online ▪ All wells have paid out 1,100 ▪ Over a ~2 year period, PetroTal drilled wells have already returned 1.8x their CAPE
Slide 13: 2021 guidance
2021 guidance Development focused with completion of scalable infrastructure 2021 budget summary and EBITDA heat map 4 ■ 2021 production guidance adjusted slightly for revised drilling schedule ■ Executing adjusted plan to drill 3 new horizontals, 1 deviated, and 1 water disposal well in 2021 ■ Revi
Slide 14: 2P reserves based on highly conservative recovery factor vs analogue fields
2P reserves based on highly conservative recovery factor vs analogue fields Bretaña field performance consistently shows higher recovery factors as shown in analogue fields ■ Well defined four-way structure bounded by a reverse fault to the east – a geologic trap system that is very prolific and pro
Slide 15: Long term development scope and profile
Long term development scope and profile Meaningful production levels for up to 12 years Key highlights3 ■ Low risk path to 20,000 bopd 30,000 2P & 3P Production Profiles o $154 million in CAPEX spent through 2020 with an 20 cuml. wells 3P Wedge additional estimated $156 million through 2023 in 25,00
Slide 16: Extensive infrastructure in place to facilitate production increases
Extensive infrastructure in place to facilitate production increases Existing facilities allow increased production ■ PetroTal investment of approximately ~$94 million achieves processing capacity Incremental Oil Incremental Water Capacity Stage Complete of ~24,000 bopd1 bopd bwpd2 ■ Continued abili
Slide 17: Export routes
Export routes Multiple export routes preserving pricing optionality 2 Export optionality 1. Iquitos Route ▪ Based on Dated Brent (premium to ICE) ▪ Shortest route to market Iquitos Refinery 1,300 bbl/d New Brazil Option Talara Refinery ▪ $4.0/bbl differential and $7.0/bbl 20,000 bbl/d Iquitos Up to
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 Financial highlights6 +4 new producers +3 new producers P&L and cash flow 2018 2019 2020 H1 2021 Original Revised (millions) 2021 Budget 2021 Budget Production Bopd 958 4,131 5,675 8,089 11,000-12,000 10,000-11,000 Contracted Brent, (gross) USD/bbl $63.8 $64.3 $41.7 $62.8 $50.0 $67
Slide 21: PetroTal vs peers
PetroTal vs peers Key Highlights1 2022 free cash flow as a % of market capitalization ▪ PetroTal currently trades at significant discount to peers on a cash flow basis 21% in 2021 ▪ At current Brent levels, market capitalization, and under a 2P development plan PetroTal could buyback all outstanding
Slide 22: Strong 2P free cash flow generation
Strong 2P free cash flow generation Free cash flow profile pre debt service 1,3 Financial projection highlights 350 450.0 ▪ Significant free cash flow at current Brent price with CAPEX 400.0 material downside buffer should oil prices soften from 300 OPEX current levels G&A 350.0 250 Royalties 300.0
Slide 23: Solid cash flow upside
Solid cash flow upside Strong financial position 2P free cash generated over 3 years at August 17, 2021 strip 2,3 ▪ 3 year estimated cash build to over $313 million at current strip including full debt 500 millions service and working capital burdens o PetroTal could allocate cash build via the foll
Slide 24: Bretaña offers strong netbacks
Bretaña offers strong netbacks Netbacks and netback sensitivity with three offtake options 5 Netback highlights ▪ Break even oil price (Brent) of $24/bbl pre G&A Bretaña illustrative netbacks with Brent at $65/bbl Bretaña netback sensitivity ($27/bbl post G&A) Netback Detail Iquitos Saramuro Netback
Slide 25: Exploration Upside
Exploration Upside @PetroTal 7!
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 totaling ■ Leads are very similar to Bretaña and other producing fields in the basin which Bretaña Field Block Area: follow the same geologica
Slide 27: Block 107 – significant exploration opportunity
Block 107 – significant exploration opportunity Block 107 Constitución prospect ■ 100% owned and operated block with >252 million hectares, located in ■ Due to location adjacent to a new road, drilling cost is estimated to $20 million, well the Ucayali basin below the $40 million estimated for the l
Slide 28: Appendix
Appendix @PetroTal 7
Slide 29: 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 30: 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 31: Hedging Summary
Hedging Summary Two different price risks now mitigated Bayovar Port (8-9 month journey) Production to ONP Bretaña Saramuro *All future production entering the ONP will be hedged by Petroperu Jan 2021 Jul 2021 Sept 2021 Dec 2021 3.7 - 4.0 million barrels produced in 2021 (10,000 – 11,000 bopd) ~1.96
Slide 32: 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 33: 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 34: 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 35: 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 36: Recent Community and Government Meetings
Recent Community and Government Meetings Local community engagement Community meetings increasing transparency on social profit allocation Ministry of Mines meeting ratifying community commitments 35
Slide 37: 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 38: 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”). Brent refers to Intercontinental Exchange
Slide 39: 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 40: 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 41: Contact
Ltd. Manolo Zuniga Douglas Urch (713) 609-9101 (713) 609-9101 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