Page 18 - LatAmOil Week 25

LatAmOil NEWS IN BRIEF LatAmOil

The diverse regional geology provides a range of At May 31, 2020, approximately 2.1mn The Company has accounts payable and
structural and stratigraphic traps with reservoir barrels of oil produced by PetroTal and sold to accrued liabilities of approximately $49mn,
intervals spanning Paleozoic-Tertiary. Mature PetroPeru under the Contracts were either in the excluding the contingent liability to Petroperu.
basins with producing fields to the north and pipeline or storage tanks. Of this amount, $33.7mn represents accounts
underexplored frontier basins to the south pro- The amount of this contingent liability to payable, with 47% of the amount not due until
vide the perfect exploration environment with Petroperu will be definitively determined when subsequent quarters, up to Q2-2021. Accruals
many exciting opportunities. the security arrangements for PetroTal’s obliga- for various projects underway total $10.8mn
PGS, June 18 2020 tions are finalised, expected to be within the next with expected due dates ranging from Q3-2020
30 days. Based on current Brent oil prices, the to Q2-2021. The balance of $4.7mn is val-
liability is expected to be approximately $26mn, ue-added tax (VAT) that will be offset against
FINANCIAL as determined by the difference between the cur- VAT collected on subsequent oil sales. Most
rent Brent oil price and the previously booked of the amounts owed relate to the Company’s
CruzSur Energy sales prices for the 2.1mn barrels that PetroTal drilling programme in late 2019 and early 2020,
has sold to Petroperu up to May 31, 2020. Petro-
along with construction of the central processing
announces grant Tal will be required to make equal monthly pay- facilities at Bretaña.
ments, for 36 months, to Petroperu based on the
The current amount owing to our suppliers
of stock options amount of the liability so determined. is approximately $18mn. In coordination with
The above-mentioned liability could be our suppliers, $6.6mn of this amount is expected
CruzSur Energy announces that it has granted adjusted as PetroTal benefits from the higher to be paid by the end of June to facilitate the
an aggregate of 1.556mn stock options under forecast oil prices in the second half of 2020 re-opening of the Bretaña oilfield in early July
the Company’s stock option plan to directors, and into 2021, when the underlying barrels are 2020.
officers, employees, consultants of the Company physically sold by Petroperu. The eventual sale Cash: As referred to in the Announcement,
and charities with an exercise price of CAD0.275 by Petroperu of PetroTal’s oil at currently fore- taking into account the collection of oil sales
($0.20) per stock option, exercisable for a period casted Brent prices would see the liability drop invoices related to oil sales in March, April and
of 10 years from the date of grant. by $7mn to approximately $19mn. A recent May 2020 in the next few weeks and the net
All of the above is subject to approval of the Platt’s article showcases this possibility, when it proceeds of the Placing, PetroTal will have cash
TSX Venture Exchange. reported that Petroperu has finalised arrange- of approximately $28mn; leaving the business
CruzSur Energy Corp. is a publicly traded ments to sell to BP 420,000 barrels of Bretaña oil well-funded to continue the development of
E&P company focused on proven oil and gas on July 10, 2020, based on the immediately pre- the Bretaña oilfield, albeit at a slower pace. The
plays in Latin America. The Company holds a vailing 10-day average Brent price, less a quality credit facility mentioned in the Announcement
large diversified portfolio of producing, devel- differential of approximately 3.5%. The liability will further position the Company to complete
opment and unexploited assets in Colombia and adjustment is further showcased by the fact that Bretaña’s development and secure the required
Argentina, where it will leverage its amplitude the remaining oil is not expected to be sold by hedging strategy.
of technical expertise and proven track record Petroperu until October 2020 and into early Bretaña oilfield: While the Bretaña oilfield
building companies and creating value. 2021, when we expect higher Brent oil prices. remains shut in, operating costs at the field are
CruzSur Energy, June 24 2020 Sales terms: Under the original terms of the minimal at approximately $100,000 per month.
Oil Sales Contract, invoices submitted to Petrop- The Company is confident in its ability to ramp
Peru: PetroTal announces eru for oil sales were payable 180 days after sub- up activity at Bretaña, ahead of the planned reo-
mission which, at the time, reflected the time pening in July, to ensure the oilfield will return to
completion of $18mn estimated for the oil to transit the Northern Oil normal operating status.
Bretaña production and development: At
Pipeline (ONP) and be sold by Petroperu. The
equity placing amendment to the invoice terms to 240 days the time of the shut in of the Bretaña oilfield in
reflects an updated estimate of this transit time.
early May, the Company was producing approx-
PetroTal, the Peruvian focused E&P company, To support the Company’s liquidity, all prior imately 11,433 barrels per day (bpd) of oil from
has announced that its GBP14.1mn ($17.52mn) invoices submitted by PetroTal under the Oil seven wells. Comparatively, in Q1-2020, Petro-
placing, as announced on June 12, 2020, has Sales Contract have been factored, at a nominal Tal produced 9,688 bpd, up 25% from 7,767 bpd
now been completed and trading on AIM in the cost, through local Peruvian banks utilising a in Q4-2019. From April 1, 2020 to May 3, 2020,
141,203,891 new Common Shares, issued pur- facility arranged by Petroperu. As per the terms when the oilfield was shut in due to the Peruvian
suant to the Placing will commence June 18. All of a typical factoring facility, at the end of the 240- government Covid-19 health directive, average
monetary amounts in this release are in United day period Petroperu will pay the due amount to production was 11,465 bpd. Due to the field
States dollars, unless otherwise indicated. the local Peruvian banks. PetroTal will continue shutdown, average first-half production will be
Further to the announcement of June 12, to factor future invoices on the same terms. The 6,934 bpd.
2020 concerning the three year arrangement extension of the invoice terms from 180 to 240 When the field reopens, the Company
with Petroperu the Company provides a further days is not expected to have any impact on the expects that the production level attained at the
update on the current financial and operational timing of PetroTal’s cash flows from oil sales. time of field shutdown will be achieved, follow-
status of the Company. Trade Payables: To ensure all suppliers were ing a short period of production evaluation.
Contingent liability: Petroperu and the Com- fully aligned with the Company’s development Subject to the Brent oil price remaining at or
pany have agreed to structure the contingent lia- strategy, the Company insisted they provide above approximately $40 per barrel, the Com-
bility due to Petroperu under the Bretaña field attractive payment terms for their services. This pany plans to drill another production well in
oil sales contract and oil swap contracts with has allowed the Company to execute on time and Q4-2020 and anticipates average production of
Petroperu into a liability to Petroperu to be paid budget from day one and expects to continue 9,100 bpd for 2020, inclusive of 11,190 during
by PetroTal over a three-year period. doing so. the second half of 2020.

P18 www. NEWSBASE .com Week 25 25•June•2020