PetroTal posts record Q1 2025 production, prepares for Capex flex amid oil price pressures

PetroTal Corporation began 2025 on a high note, delivering record oil production and sales during the first quarter, despite facing a challenging pricing environment. For the three months ended March 31, 2025, the Calgary- and Houston-based independent reported average daily production of 23,281 barrels of oil per day (bopd) and average sales of 23,286 bopd—both the highest quarterly figures in its history.

Revenue for the quarter reached $110 million, with PetroTal realizing a net sales price of $52.46 per barrel after accounting for tariffs and transportation charges. The company’s Brent-linked contracted sales price averaged $73.89 per barrel, roughly in line with the benchmark Brent crude average of $73.96 over the same period.

These strong sales helped PetroTal achieve adjusted EBITDA of $71.9 million, equivalent to $34.29 per barrel, and a net income of $30.9 million or $0.03 per share. Free funds flow stood at $48.2 million, marking the company’s second-best quarter since inception.

How Has PetroTal Managed Costs and Investments Amid Macro Headwinds?

Capital expenditures were $23.6 million, sharply down from $50.6 million in Q4 2024, reflecting the wind-down of the Bretana field drilling campaign in January. With limited drilling activity planned for the first half of the year, PetroTal is prioritizing cash preservation and project efficiency.

The erosion control initiative at the Bretana field remains a key capital project for 2025. The company incurred $1.8 million in erosion control costs during the quarter, significantly lower than the $9.6 million spent in Q4 2024. However, river level conditions delayed mobilization activities for steel segment construction in Pucallpa, pushing back the timeline for piling activity by about a month. PetroTal still expects to spend $35–40 million on the project in 2025, with about 75% to be expensed through the income statement.

To enhance its funding flexibility, PetroTal secured a $65 million syndicated term loan from two Peruvian banks. This four-year facility, bearing a fixed interest rate of 8.65%, will primarily fund the erosion control works and provides a buffer against continued oil price weakness. The company emphasized that the loan terms preserve its ability to pay dividends.

What Is the Status of PetroTal’s Field Operations at Bretana and Block 131?

PetroTal reported average Q1 2025 production of 22,660 bopd at the Bretana field in Block 95. Monthly output reached 23,080 bopd in March, a record for the field. High river levels during the rainy season enabled the company to maximize transportation and export throughput via barging routes to Brazil, which accounted for 88% of Q1 sales.

However, between December 2024 and April 2025, four of the 24 producing wells at Bretana experienced pump failures. These outages were deemed operationally normal, and replacements are scheduled in Q3 2025 as part of a routine workover program. The repairs are expected to restore up to 4,000 bopd of production, although current guidance for 2025 remains unchanged at 21,000–23,000 bopd.

At Block 131‘s Los Angeles field, Q1 production averaged 620 bopd, flat versus the previous quarter. Output declined slightly to 561 bopd in April due to natural depletion. PetroTal aims to reverse the decline by launching a four-well workover and acid stimulation campaign beginning in June 2025. Subject to the arrival of a new rig later in the year, a two-well infill drilling program is also planned, with completion likely by year-end.

How Is PetroTal Positioning Itself Against Volatile Oil Prices?

The company is proactively managing its exposure to oil price fluctuations. As of April 30, PetroTal had hedged approximately 38% of its remaining 2025 production using costless collars, with a Brent floor of $65 and a cap of $82.50 per barrel. At the end of March, these positions were valued at $1.9 million, increasing to $14.2 million by May 7 amid falling crude prices.

CEO Manuel Pablo Zuniga-Pflucker said the board remains vigilant in evaluating capital expenditures in light of weaker oil markets. While no immediate capex cuts are planned, especially given the low activity expected in Q2, PetroTal could defer or cancel parts of its H2 2025 development campaign if pricing remains unsupportive. The company reiterated its commitment to balance capital efficiency with shareholder returns.

What’s the Outlook for Shareholder Returns in 2025?

Despite market headwinds, PetroTal declared a quarterly dividend of $0.015 per share, payable June 13 to shareholders of record as of May 30. This represents a continuation of its base dividend but excludes any additional liquidity sweep due to near-term funding needs and oil price uncertainty.

The company also signaled its intent to renew its normal course issuer bid (NCIB) when the current plan expires on May 23, 2025. Since Q2 2023, PetroTal has repurchased 20 million shares under this policy. The new plan, subject to TSX approval, is expected to be executed by Stifel Nicolaus Europe Limited.

How Strong Is PetroTal’s Balance Sheet in Q2 2025?

PetroTal ended Q1 2025 with total cash of $113.6 million, of which $103 million was unrestricted. This represents a year-over-year increase of $28 million and underscores the company’s disciplined approach to capital allocation. The company’s net surplus stood at $6.3 million, reversing a deficit of $1.5 million in Q4 2024.

Market capitalization reached $435.8 million based on a share price of $0.475, reflecting improved investor confidence since Q4 2024 when shares traded at $0.39. Despite a decline from the Q1 2024 market cap of $511.9 million, PetroTal has maintained a consistent base dividend and capital program, while keeping options open for capex recalibration in a lower oil price environment.

Sentiment Analysis: What Are Markets and Analysts Saying?

PetroTal shares have risen steadily through early May 2025, supported by record output, strong EBITDA margins, and prudent cash management. Institutional investors have reacted favorably to the company’s hedging strategy and flexibility in project execution. However, sentiment remains cautious given the backdrop of declining Brent prices and possible capex deferrals in the second half of the year.

Buy-side sentiment appears neutral to moderately positive, with some analysts maintaining a hold rating pending clarity on Q3 drilling timelines and oil price trends. The combination of hedged production, a strong cash position, and debt-light balance sheet offers downside protection, positioning PetroTal as a relatively safe play among junior oil producers in Latin America.

What’s Next for PetroTal?

As the company moves into Q2 and Q3 2025, key investor focus will be on progress at the erosion control site, pump replacements at Bretana, and the success of the Los Angeles workover program. The anticipated arrival of a new drilling rig in Q3 will determine the pace and scale of Block 131’s development.

PetroTal’s management reiterated that any revisions to market guidance will depend on sustained movements in Brent crude and operational feedback from upcoming field activities. Investors can expect further updates on capital allocation and dividend policies in line with commodity market developments and strategic execution in Peru.