Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PetroTal Corp (PTALF, Financial) has increased its production by 39% compared to the same period last year, averaging over 15,000 barrels per day in Q3 2024.
- The company has returned more than $53 million to shareholders this year through dividends and buybacks, maintaining a regular quarterly dividend for seven consecutive quarters.
- PetroTal Corp (PTALF) has successfully managed operational challenges due to severe drought conditions, producing almost 40% more than during last year's third quarter.
- The company has acquired a new drilling rig, expected to provide savings on day rates and standby fees, along with increased flexibility in managing the drilling program.
- PetroTal Corp (PTALF) maintains a strong liquidity position with a cash balance of $133 million and access to over $77 million in short-term credit facilities.
Negative Points
- Production volumes have been impacted by declining oil prices, with the Brent benchmark averaging $77.74 per barrel in Q3 2024, leading to a decrease in net operating income.
- The company's net income decreased by $28 million compared to the prior quarter, primarily due to a $17.5 million non-cash charge from an unrealized commodity derivative loss.
- PetroTal Corp (PTALF) expects its cash balance to decline over the next few quarters due to existing payables, increased spending on the erosion control project, and upcoming tax liabilities.
- Operational expenses were high this quarter due to increased well maintenance costs and higher expenses related to electrical submersible pumps.
- The company faces challenges in transportation and sales capacity, with ongoing efforts to open new export routes and discussions with Petroperu to facilitate oil sales through the ONP pipeline.
Q & A Highlights
Q: With the recent and planned increases in production due to expansion of extraction sites and new well developments, what measures are being implemented to ensure that this growth is matched by a corresponding increase in transportation and sales capacity to reach customers efficiently?
A: As the investors know, we've been looking at different routes, but for us, as Petrotal, it is key that we go back to the ONP. My goal is that we should have about half of our production going east and half going west. That way, we have full flexibility. We are working to get Petroperu fully engaged and not only Petroperu but even the Finance Ministry to bring a solution. The recent naming of the new management team of Petroperu gives me confidence that we will be able to engage them.
Q: Given the large and growing cash pile and the depressed share price, why isn't the company conducting tender offers to buy back large chunks of shares?
A: This is something we always review every quarter. We believe that our drilling program drives superior returns compared to share buybacks. We need to be cautious on the oil price outlooks, especially in 2025 when we have the erosion control project and significant cash tax payments. We will continue to evaluate this option.
Q: Could you explain the benefits and savings that come with the new drilling rig?
A: Indeed, we're going to see savings on the day rates and the standbys improve uptime. The rig we've been using was old, and it was time to bring a modern rig that uses less fuel and has fewer emissions. More importantly, it provides increased flexibility over the drilling program, allowing us to extract all of the growing reserves.
Q: Are there any updates on the CPSA acquisition closing? What are plans for further drilling in block 131 in 2025?
A: We are expecting to close before the end of November. We are working hard to come up with a good plan, and if the government supports our efforts and lowers the royalties, that would be fantastic. We plan to go in and work some of the wells, similar to what we've been doing in Britannia.
Q: OpEx appears to have been high this quarter because of the barging. Would you expect OpEx in future periods to come back to previous levels?
A: OpEx in the third quarter showed mix changes, primarily due to higher expenses related to well maintenance. Transportation costs decreased due to smaller diesel consumption. For next year, excluding the erosion project, we should expect OpEx on a per barrel basis to be similar, but we'll only know that when we finish the budget.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
