PetroTal Corp. (TAL:TSX.V; PTALF:OTCQX; PTAL:AIM) has issued 2024 production and capital guidance alongside updates on new export infrastructure projects, reported Auctus Advisors analyst Stephane Foucaud in a January 23 research note.
Foucaud sees over 20% volume growth next year but trims his target price to £1.50 based on lower oil price assumptions. He believes cash distributions to shareholders support continued upside.
2024 Production Outlook
PetroTal forecasts 2024 output averaging 16,500-17,500 barrels per day, a 20% increase year-over-year. Foucaud's model predicted 18,600 bpd factoring drier conditions, so the guidance range seems achievable.
Spending is budgeted at US$135 million to support development. Growth relies on minimizing seasonal declines and bringing new export capacity online to alleviate bottlenecks.
New Export Routes
Two new oil export pipelines from PetroTal's Bretana oil field should enter service in 2H 2024. A route via Ecuador could flow at 2,000 bpd in October, with a separate line to Peru's Bayovar port reaching 2,000 bpd by July.
Foucaud believes these additions will mitigate production declines during the dry season once fully scaled in 2025. He forecasts output reaching 19,900 bpd in 2025.
2024 Investment Program
This year's US$135 million capital budget includes US$107 million for Bretana development and US$12 million to gather seismic data validating migration models south of the field. The analyst sees this partially derisking Block 95 prospects as comparable to Bretana.
An additional US$14 million is allocated to riverbank erosion control efforts protecting local communities and infrastructure. Preventative operating expenses for erosion protection exceed US$20 million.
PetroTal also plans to direct US$4 million-plus of G&A and US$7 million in opex to community investments as part of its social responsibility efforts.
Updated Valuation View
Foucaud has trimmed his target price to £1.50 per share from £1.35, reflecting lower 2024 oil price assumptions and erosion control costs. However, PetroTal anticipates over US$65 million in shareholder payouts this year across dividends and buybacks.
The analyst's risked net asset value now stands at £1.33 per share based on updated discounted cash flow modeling. He sees potential re-rating catalysts from executing 2024 development plans and progress on strategic infrastructure projects.
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Disclosures fo Auctus Advisors, PetroTal Corp., January 23, 2024
PetroTal Corp. (“PetroTal” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
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Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.
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