Petrotal sets 2026 production guidance, capital budget

Executive Summary

• Petrotal Corp. released its 2026 guidance, prioritizing liquidity preservation and cost discipline over near-term production growth due to operational challenges in 2025.
• The company suspended its dividend to maintain a minimum unrestricted cash liquidity of $60 million and reduce capital expenditure to $80–$90 million.
• Production guidance for 2026 is set at 11,750–12,250 barrels of oil per day (bopd), with a target to resume development drilling at the Bretana field by Q4 2026 using a third-party contractor.

Key Details

• Production Guidance: Target average 2026 production volumes of 11,750 to 12,250 bopd.
• Capital Budget: Approved 2026 capital budget of $80 million to $90 million (including ~$18 million carried over from 2025).
  • $45 million for drilling, rig mobilization, and well facilities (assuming completion of two development wells at Bretana by year-end 2026).
  • $16 million for essential operational continuity projects (camp habitability and safety upgrades).
  • $15 million for capitalized erosion control investments; $18 million included in operating expenditures (opex).
  • $10 million for other projects, including water handling facilities, Ucawa field infrastructure, and exploration.
• Financial Guidance:
  • Annual adjusted EBITDA of $30 million, assuming an average Brent oil price of $60 per barrel.
  • Maintenance of minimum unrestricted cash liquidity of $60 million.
• Dividend Status: Dividend suspended for 2026 to navigate the transition and preserve liquidity.
• Drilling Strategy:
  • Initiated tender process for a third-party drilling contractor to mitigate scheduling risks.
  • Contractor selection expected by end of Q1 2026.
  • Target spud date for first development well: October 1, 2026.
  • Two development wells planned for 2026; broader eight-well program (8 remaining undeveloped 1P locations and 8 probable locations) continues into 2027.
  • Goal to restore field production capacity to >20,000 bopd.
• Asset Management:
  • Amazonia-1 rig no longer required; discussions underway for orderly exit from leasing arrangement.
  • Conservative provisions included in budget for termination costs.
• Operational Updates:
  • Proactive replacement of electric submersible pumps (ESPs) and production tubing to manage downtime.
  • 100% of Bretana production sold via Brazil route to fulfill minimum volume requirements.
  • Los Angeles production sold under short-term contracts to PetroPeru-operated refinery at Iquitos.
• Erosion Control:
  • Total investment of $65 million to $75 million over 2024–2026.
  • $33 million allocated in 2026 ($18 million expensed, $15 million capitalized).
  • Project expected to complete by Q4 2026.

Notable Quotes

• "We recognize that our operational challenges in 2025, specifically rig availability and production reliability, have impacted investor confidence. Petrotal's 2026 budget is a direct response to that feedback. By moving to a third party drilling provider and deferring non-essential infrastructure spend, we are prioritizing liquidity over near-term production growth." — Manuel Pablo Zuniga-Pflucker, President and CEO
• "While the decision to suspend our dividend was difficult, this budget confirms it was necessary to navigate the transition through 2026 without compromising the long-term value of the Bretana field." — Manuel Pablo Zuniga-Pflucker, President and CEO