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Oil price

In the US markets are variously closed for the funeral of President Jimmy Carter, most of the day in equities, half a day in bonds but open all hours in energy, albeit low volumes I imagine. Yesterday despite the modest fall in crude stocks, the rise in products soured the market at the end of the day. Today those falls have been recovered and a bit.

PetroTal Corp

PetroTal has provided the following operational and financial updates. All amounts are in US dollars unless stated otherwise.

Key Highlights

• PetroTal corporate production averaged approximately 19,150 bopd in Q4 2024, including volumes from the recently acquired Block 131
• Bretana Q4 2024 production averaged 18,938 barrels of oil per day (bopd), a 27% increase on Q4 2023
• Bretana 2024 annual production averaged 17,733 bopd, a 24% increase on 2023, and above guidance of 16,500 – 17,500 bopd
• Total cash of $115 million as of December 31, 2024, a 3% increase on Q4 2023
• PetroTal secures two Technical Evaluation Agreements (TEA’s) surrounding Block 131 in Peru
• PeruPetro extends current exploration period for Block 107 to February 2027

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
“PetroTal finished 2024 on a strong note, with production from our Bretana field hitting new highs in Q4. We ended the year with a cash balance of $115 million, which puts the Company in a good position to support its ongoing dividend and capital programs in 2025.

I am pleased to announce that PetroTal has been granted two new Technical Evaluation Agreements in Peru’s Ucayali Basin, immediately surrounding and on trend with our recently acquired Block 131. Several exploration prospects have already been identified on existing seismic coverage, setting up a new high-potential core area for the Company in central Peru.

PeruPetro has updated the current exploration period for Block 107 to February 2027, after reviewing the force majeure periods, which will give us ample time to undertake an exploration program at the high-impact Osheki-Kametza prospect. Peru’s oil industry is open for business, and we continue to see plenty of interesting business development opportunities in the country.

We are in the final stages of approving our 2025 budget and guidance update and look forward to providing more details on January 16. PetroTal delivered on its growth and return of capital objectives in 2024, and we will continue to deliver for investors in 2025.”

Today’s update from PetroTal ticks a number of my boxes for a Bucket List inclusion,with excellent Q4 production of 19,150 b/d making a full year number of up 24% at 17,733 b/d and which beat the 16,500-17,500 b/d guidance in some style.

The next tick in the box is for the receipt of two Technical Evaluation Agreements in the Ucayali Basin which appeals as it is a good post code being on trend with Block 131. Also gaining a tick is that the company has had the Block 107 exploration period extended to February 2027 which adds a touch of spice.

Finally the net cash of $115m is good for business development and shareholder returns so income is nailed on and activity in the now expanded portfolio in Peru gives incredibly good potential upside, what’s not to like?

Q4 2024 Production Update

PetroTal’s production averaged approximately 19,150 bopd in Q4 2024, a new record for the Company. This total includes 18,938 bopd from the Bretana field at Block 95, and a quarterly average contribution of 212 bopd from the Los Angeles field at Block 131, where PetroTal holds a 100% WI in production from the closing date of its acquisition on November 29, 2024.

Following the conclusion of the annual dry season in early October, PetroTal’s operations team responded quickly to rising river levels, restoring Bretana field production to capacity by October 15. As a result, Bretana’s Q4 2024 quarterly average production increased 25% compared to the prior quarter, and 28% compared to Q4 2023.

2024 annual average production from the Bretana field was 17,733 bopd, slightly above the high end of PetroTal’s guidance range of 16,500 to 17,500 bopd, and an increase of 24% compared to the 2023 annual average of 14,248 bopd. According to public production data from PeruPetro, fiscalized Los Angeles field production averaged 784 bopd in 2024, and 624 bopd in Q4 2024.

Since the closing of the acquisition of Block 131 on November 29, 2024, PetroTal has been operating the asset under the name “Ucawa Energy”. As a result, public disclosure from Peruvian regulators relating to Block 131 may include this corporate name, which is a wholly owned subsidiary of PetroTal Corp.

Drilling & Completion Update

As previously announced with Q3 2024 results, PetroTal completed well 21H at Bretana on November 9. This well was brought onstream on November 17 at a flush production rate of 7,144 bopd, before producing at an average rate of 2,522 bopd over the next 30 days. PetroTal spudded well 22H at Bretana on November 12; this well was completed ahead of schedule on December 19, in-line with budget expectations at $12.0 million. The Company will provide an update on initial flow rates once the well has been onstream for at least 30 days.

PetroTal spudded well 23H at Bretana on December 23. This well is expected to be completed by the end of January 2025, at which point the Company plans to release its current drilling rig and pause the Bretana development drilling program. As previously contemplated when PetroTal announced an acceleration of its capital program with Q2 2024 results in August 2024, flush production from wells 22H and 23H will be used to manage field output in-line with installed fluid handling capacity throughout H1 2025.

Cash & Liquidity Update

PetroTal ended 2024 in a healthy liquidity position, exiting the year with total cash of approximately $115 million, of which $103 million was unrestricted. This compares to total cash of $133 million at the end of Q3 2024, and $111 million at the end of 2023. PetroTal ended the year with accounts payable and receivable of $88 million and $85 million, respectively.

During Q4 2024, PetroTal continued preparatory work for its erosion control project. Recall that PetroTal’s Q3 2024 financial results included a $7.3 million inventory provision for the purchase of steel components related to this project. These components will be recorded as an operating expense in Q4 2024. Q4 2024 also included the previously announced acquisition of Block 131, which closed on December 1. Cash consideration of $6.1 million for this asset was essentially offset by the assumption of a cash balance of $5.9 million on closing. This cash balance reflects the cumulative cash flow from this asset between the effective date of the acquisition on January 1, 2024, to its closing date on November 29, 2024.

Pursuant to its ongoing share buyback program, PetroTal repurchased 1.5 million shares in Q4 2024, at an average price of US$0.46/share. The Company also paid a dividend of $13.7 million (US$0.015/share) on December 13, 2024, related to Q3 2024 operations.

Exploration Update

PetroTal signed a contract extension with PeruPetro for the exploration Block 107, in Peru’s Ucayali Basin, in December 2024. This extension of the Fifth Exploration Period, which was granted to account for force majeure periods in the interim, will now last until February 2027, providing ample time to undertake an exploration program at the Osheki-Kametza prospect.

PetroTal also signed two Technical Evaluation Agreements (TEA’s) with PeruPetro in December 2024. The TEA’s for Blocks XCVII and XCVIII are located in the vicinity and on trend with PetroTal’s Block 131, as well as the Aguaytia and Agua Caliente fields in Peru’s Ucayali Basin. These new evaluation contracts offer growth potential in proven exploration acreage near our existing operations in the Ucayali Basin. Blocks XCVII and XCVIII include acreage that was previously relinquished from the present-day Block 131 and contain several drillable prospects and leads identified with existing 2D seismic coverage in the producing Cushabatay light oil play. Contractual commitments will be executed in two 12-month phases, and mainly include geological and geophysical studies such as seismic imaging, geochemical modelling and hydrocarbon potential evaluation reports. The TEA’s also grant PetroTal the option to convert the blocks to exploration licenses within the next 24 months.

2025 budget guidance webcast link for January 16, 2025

PetroTal will host a webcast following its 2025 budget and guidance release on Thursday January 16, 2025 at 9am CT (Houston), 3pm GMT (London). Please see the link below to register.

https://brrmedia.news/PTAL_CB25

Zephyr Energy

Zephyr has confirmed that, further to its announcement on 23 December 2024, the Nabors Drilling USA B29 rig is now being mobilised to site where it will drill an extended lateral on the State 36-2 LNW-CC-R well.

The rigging up process is expected to be completed shortly, with drilling operations expected to commence in mid-January 2025. In order to expedite drilling operations, preparatory work on the well, which included the removal of production tubing from the existing wellbore, has already been completed utilising a cost-effective workover rig.

The extended lateral will be drilled horizontally from near the base of the existing wellbore and is expected to target an additional 5,500 feet of the Cane Creek reservoir. Drilling, once the well has spudded, is expected to take circa 30 days.

Colin Harrington, Zephyr’s Chief Executive, said:
“We remain on target to start drilling the extended lateral in mid-January 2025, following which we will complete and production test the extended reservoir interval. The well has the potential to be a major catalyst in the development of the Paradox project and we look forward to providing further updates on progress in due course.”

So, the Nabors Rig B29 is being mobilised and for those who have waited for this moment for such a long time, the State 36-2 LNW-CC-R well is about to reveal its contents as in the next 30+ days after spudding, the long lateral looks for what might be huge potential in the Cane Creek reservoir.

Investors who have stuck with Zephyr through the thick and the thin should congratulate the management on getting thus far, the fund raisings and support in early days, of wise investment in non-operated assets to fund the meagre moments and for the insurance after the blow-out.

Add to that the funding of this well in a creative and efficient way, and to not dilute the shareholders by giving away any of the Paradox Basin and we have reached this point. Bring on the spud, there is potentially a great deal there and as is always the way in the oil & gas industry the promised land, in this case it could be paradise…

Coro Energy

Coro has announced a proposed recapitalisation of the business to be implemented by way of an equity fundraising, a share capital reorganisation and the deemed redemption of part of the Company’s existing secured listed bonds with the balance being converted into equity (“the Recapitalisation”).  Once completed, it is proposed that the convertible loan notes of the Company be repaid in full and accordingly, this Recapitalisation will position Coro as a corporate debt-free regional clean energy developer with a blended renewables and gas portfolio

Equity Fundraising and Share Consolidation

The Company today announces that it is proposing to raise gross proceeds of approximately £2 million by way of an equity fundraising of which £1.9 million has already been conditionally committed by investors (“Equity Fundraising”). 

In addition, the Company is proposing to effect a share capital reorganisation (“Share Capital Reorganisation”) of the Company’s existing ordinary shares of 0.1 pence each (“Existing Ordinary Shares”). The Company is therefore proposing to consolidate the Existing Ordinary Shares so that every 100 Existing Ordinary Shares are consolidated into one new ordinary share of 10 pence (“Consolidated Share”) and a further sub-division of every Consolidated Share into one new ordinary share of 0.5 pence each (“New Ordinary Share”) and one new deferred share of 9.5 pence each (“Deferred Shares”). The Share Capital Reorganisation will reduce the number of ordinary shares in issue from 2,866,858,800 Existing Ordinary Shares to 28,668,588 New Ordinary Shares. The Share Capital Reorganisation is conditional on approval by shareholders of the Company at a general meeting which is expected to occur on or before 26 February 2025.

The Equity Fundraising comprises: 

• a subscription raising gross proceeds of at least £1.9 million (“Subscription”) through the issue of New Ordinary Shares (“Subscription Shares”) at 1.5 pence (“Issue Price”) per Subscription Share; and
• a retail offer (“Retail Offer”) raising further funds through the issue of New Ordinary Shares (“Retail Offer Shares”) at the Issue Price.

The Company has received binding conditional commitments from new investors and certain existing shareholders in respect of 126,666,667 Subscription Shares.

The Retail Offer will be organised by the Company’s broker Hybridan LLP with one of the retail platforms directly. The Retail Offer will open on Friday 10th January. Further details of the Retail Offer will be announced separately.

It is anticipated that the Equity Fundraising will raise gross proceeds of approximately £2 million and is subject to a minimum amount of £1.9 million.  The Company reserves the right to raise in excess of £2 million subject to investor demand.

The net proceeds of the Equity Fundraising will, if completed and together with the Group’s cash on hand of £0.25 million at 31 December 2024 (unaudited), provide the Company with sufficient funds to repay its existing convertible loan, continue to develop its pipeline of renewable energy projects, with a particular focus on its Vietnamese C&I rooftop solar projects, and to meet ongoing Duyung PSC general and administrative expenses.

The Equity Fundraising is conditional, inter alia, on:

• the resolution (to grant the relevant shareholder authorities to issue New Ordinary Shares pursuant to the Equity Fundraising and the Bond Proposals and to approve the Share Capital Reorganisation) being proposed at a general meeting of shareholders of the Company to be held on or before 26 February 2025 (“Shareholder Resolution”) being duly passed;
• the resolutions being proposed at the relevant meetings of bondholders (as referred to below) to be held on or before 26 February 2025 being duly passed;
• admission of the Subscription Shares,  the Retail Offer Shares and the Bond Conversion Shares (as defined below) being admitted to trading on the AIM market of the London Stock Exchange (“Admission”).

The Subscription Shares and the Retail Offer Shares will represent approximately 28% of the enlarged issued share capital following the completion of the Recapitalisation and Admission.

It is expected that completion of the Equity Fundraising and Admission will occur before the end of February.

Should Shareholders not vote in favour of the Shareholder Resolution set out in the notice of General Meeting, the Board would not be able to proceed with the Recapitalisation and the Company would be unable to repay the Bonds on their due date. In these circumstances, in the absence of substantial capital being provided to the Company in the short term, the Board would likely seek to cancel the Company’s admission to trading on AIM and commence an orderly winding up of the Company.  In this event it is highly unlikely that Shareholders would see any return on their current investment.

Bond Redemption and Conversion

As previously announced on 12 April 2024 the Company was granted a standstill in respect of the Company’s Luxembourg listed EUR 22.5 million 10.0% secured notes (“Bonds”) which were due to mature on 12 April 2024.  The aggregate amount outstanding under the Bonds (including interest) at today’s date is EUR 22.5 million.

The Company is intending on or about 13 January 2025 to publish its proposals in relation to the Bonds (“Bond Proposals”) which will comprise:

• the deemed repayment of 75 % of the principal amount of the Bonds together will all accrued interest; and
• the conversion of the balance of principal outstanding under the Bonds into 311,617,085 New Ordinary Shares (“Bond Conversion Shares”) at the Issue Price.

The Company is proposing that meetings of the holders of the two tranches of Bonds (the “Bondholders”) will be convened on or before 26 February 2025 (the “Bondholder Meetings”).  Bondholders, who hold approximately 68% of the principal outstanding under the Bonds have signed irrevocable undertakings to vote in favour of the Bond Proposals at the Bondholder Meetings.

The Bond Proposals will be conditional, inter alia, on:

• the Shareholder Resolution being duly passed;
• the Bondholders passing the requisite resolutions at the Bondholder Meetings; and
• Admission of the Bond Conversion Shares, Subscription Shares and Retail Offer Shares on the AIM market of the London Stock Exchange.

On completion of the Bond Proposals all the principal and interest outstanding under the Bonds will be deemed to have been repaid in full of approximately 75 % of the principal and all accrued interest having been effectively written off and with the balance of the principal being converted into the Bond Conversion Shares.  The Bond Conversion Shares will represent approximately 66% of the enlarged issued share capital following the completion of the Recapitalisation and Admission.  As part of the Bond Proposals the Bondholders will agree not to dispose of any of the Bond Conversion Shares for a period of six months from the date of Admission.

A copy of the circular (“Bondholder Circular”) containing the Bond Proposals which will be sent to Bondholders shortly and once sent, will be available on the Company’s website at www.coroenergyplc.com

Convertible Loan Repayment

As previously announced on 15 August 2024 and 6 November 2024, the Company has US$750,000 of convertible loan notes.   Once the Recapitalisation has been completed it is intended that the amount outstanding (approximately US$900,000) under the convertible loan notes, including accrued interest, will be repaid .

General Meeting

The Company is intending to hold a general meeting (“General Meeting”) on or about 26 February 2025 at which the Shareholder Resolution will be proposed. A circular (“Shareholder Circular”) convening the General Meeting is expected to be posted to Shareholders on or about [x January 2025] and will be made available on the Company’s website at www.coroenergyplc.com.

The Company’s largest shareholder, River Merchant Capital, has signed an irrevocable undertaking to vote in favour of all the Shareholder Resolution to be proposed at the General Meeting.]

Vietnam Monetisation

As part of its entry into the growing Vietnamese C&I rooftop market, Coro constructed a 3-megawatt pilot project consisting of over 4,500 solar panels and other ancillary components that has been installed across four factory roofs and covers a total area of 16,120 square metres. This project has been operational since 2022 and delivers electrical power that is being consumed on site by Phong Phu Corporation, one of Vietnam’s premier textile manufacturers under a 25-year power purchase agreement. Following a competitive bidding process, the Company is considering divesting this asset to provide funding for its roll out of the higher margin Mobile World Group contract and to repay part of the existing loan from its EPC contractor in Vietnam.  Further information will be announced as appropriate.

As previously announced on 10 October 2023, the Company signed a Memorandum of Understanding (“MoU”) in Vietnam with Mobile World Group (“MWG”) granting Coro exclusivity on an initial 900 company sites in the central and southern regions of Vietnam where solar irradiation is the highest in the country.  Coro will build, own, and operate each rooftop solar system and sell all generated electricity directly to each Mobile World Investment Corporation location under a 14-year Power Purchase Agreement, extendable in certain circumstances. The Power Purchase Agreement (“PPA”) was signed on 8 March 2024 and there are 87 sites (circa 3MW) constructed with MWG in Vietnam as of today’s date. Once operational these are expected to generate free cash flows of approximately US$400,000 per annum.  The Company will continue rolling out sites following the completion of the transaction. 

As a developer, having already established a degree of critical mass of MWG sites, Coro is turning its attention to monetising developed sites, largely to provide finance for future developments.  Coro’s strategy remains to retain ownership of sites where funding allows and to manage its funding needs through selling tranches of constructed sites to institutional investors where necessary. The Company is in discussion with various third parties relating to the acquisition of existing tranches and will update the market further when appropriate.

The Company also continues discussions, as announced on 18 January 2024, with HD Bank of Vietnam to provide local debt finance for its rooftop solar portfolio.

Corporate Update

The Company continues to develop its utility scale solar and wind projects in the Philippines where it has already, as previously announced, secured two 100MW wind energy service contracts and a 130 meter tall meteorological mast has been collecting data since January 2024. An application for a third 100MW wind energy service contract is targeted for 2025 and the Company is currently initiating the conceptual design for these 300MW wind power projects with a view to determine the specific land requirements.  Separately, the completed pre-feasibility study on the Company’s 75MW solar project is expected shortly and the Company is targeting to apply for its first solar service contract during Q1 2025. 

Conrad Asia Energy Limited, the holder of a 76.5% operated interest in the Duyung Production Sharing Contract in Indonesia, in which the Group has a 15% interest continues to technically mature the development of the Mako gas field in preparation for Final Investment Decision. The Company continues to await the outcome of the farm down process initiated by the Operator where Coro has drag and tag along rights.

As previously announced by the Company on 29 February 2024, the Company initiated legal proceedings against an Italian contractor in relation to damages following the historical cessation of production at the Bezzecca field in Italy.  The next hearing is expected to be 8 May 2025.  Further announcements will be made as appropriate. 

Tom Richardson, Chairman, commented:
“We are delighted to announce the recapitalisation and I would like to thank our lenders, existing shareholders and new investors for their support to make this possible.  This plan, if approved, positions the Company as a largely debt free vehicle with an exciting blend of C&I rooftop solar projects in Vietnam, utility scale projects in Philippines and a gas development in Indonesia.  I strongly encourage all shareholders to vote for the resolution at the forthcoming General Meeting.”

A tricky situation here as it looks like there is a serious haircut proposed if this offer is approved by funders across the board. The way that Coro has changed has left me without the ability to make a reasoned, independent judgement and without any executive directors, at least not on the website, nor any signs of meetings to elucidate strategy nor even any recent shareholder presentation makes lack of data on Coro a little too uncomfortable to give a reason for investing. 

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog