PetroTal Corp. (TAL:TSX; PTALF:OTCQX; PTAL:AIM) Q1/25 results were notable for a production beat and a more robust-than-expected balance sheet, reported Auctus Advisors Analyst Stephane Foucaud in an April 10 research note. Auctus reduced its Brent oil price assumptions, which in turn led to a lower target price on the Texas-based oil and gas company.
316% Return Potential
According to the analyst, the new target price is £1.20 per share, down from £1.30. This resulted from Auctus' new, reduced Brent price estimates of US$75 per barrel (US$75/bbl) for Q2/25 and US$60/bbl for Q3/25.
The target suggests a possible return of 316% given PetroTal is trading at about £0.30 per share.
At the current share price, noted Foucaud, the expected full-year 2025 (FY25) dividend yield is greater than 16%.
Production a Beat
The analyst reviewed the oil and gas company's production during Q1/25, ended March 31, 2025, which totaled 23,280 bbl/d. Of this, Bretana was responsible for 22,660 bbl/d, about 1,000 bbl/d more than Auctus' forecast. Bretana production was due to the strong performance of the recent wells. In March, well 23H produced 3,363 bbl/d and reached a maximum daily high of 5,110 bbl/d. In the same month, well 22H, brought online in mid-January, yielded an average of 4,386 bbl/d. The remainder of the production total during Q1/25, of 620 bbl/d, was produced at Los Angeles.
PetroTal reiterated its FY25 production guidance of 21,000–23,000 bbl/d.
Robust Balance Sheet
Foucaud highlighted PetroTal's balance sheet at quarter's end. The company had US$113.60 (US$113.60M) in cash, more than Auctus' estimate of about US$100M. Also, accounts receivable minus accounts payable was significantly higher than Auctus' projection, at US$27M versus (US$3M).
"Overall, the balance sheet at the end of March was about US$40M ahead of our expectations, driven by strong production levels and the postponement of a cash tax payment (originally projected at US$25M in Q1/25, now expected in Q2/25)," wrote Foucaud.
What to Watch For
Foucaud reported two upcoming events that could boost the energy company's share price. One is the start of field work for the erosion project at Bretana, targeted for next month. The other is the commencement of drilling at Los Angeles, anticipated in early H2/25.
"PetroTal has significant flexibility to adapt its capital program to changes in oil pricing," Foucaud wrote.
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