Malcy’s Blog: Oil price, PetroTal, Union Jack, Reabold.

WTI (Sep) $64.35 -81c, Brent (Oct) $66.89 -75c, Diff -$2.54 +6c.

USNG (Sep) $3.08 +6c, UKNG (Sep) 81.53p -2.98p, TTF (Sep) €33.16 -€0.855.

Oil price

Another quiet day crude oil as conflicting factors exerted pressure, better than expected Chinese export data has helped as have the potential sanctions on Russia and India. The EIA inventory numbers were better than expected with crude drawing 3.029m barrels and gasoline drew by 1.363m interesting as the real feature of the data was that refinery runs were a. whopping 96.9% up 1.5%.

PetroTal

PetroTal has reported its operating and financial results for the three months ended June 30, 2025. All amounts herein are in United States dollars unless stated otherwise.

Selected financial and operational information outlined above should be read in conjunction with the Company’s unaudited consolidated financial statements and management’s discussion and analysis (“MD&A”) for the three months ended June 30, 2025, which are available on SEDAR+ at www.sedarplus.ca and on the Company’s website at www.PetroTal‐Corp.com.

Key Highlights

•      Average Q2 2025 sales and production of 20,578 and 21,039 barrels of oil per day (“bopd”), respectively;

•      Generated Adjusted EBITDA⁽¹⁾ and Free Funds Flow⁽¹⁾ of $44.3 million ($23.66/bbl) and $27.2 million ($14.55/bbl), respectively;

•      Q2 2025 capital expenditures of $17.1 million, bringing H1 2025 capital expenditures to $40.7 million;

•      Net Income of $17.5 million ($9.35/bbl) in Q2 2025, and $48.4 million ($11.46/bbl) in H1 2025;

•      Total cash of $142.1 million, including $99.3 million of unrestricted cash;

•      Declaring a quarterly dividend of $0.015/sh, payable to shareholders on September 12, 2025, and;

•      Revision of 2025 production guidance to a range of 20,000 to 21,000 bopd, on capital spending of $80 million.

(1)      Non-GAAP (defined below) measure that does not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures presented by other entities. See “Selected Financial Measures” section.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

“PetroTal has once again delivered strong results in the second quarter of 2025, reflecting our ongoing commitment to profitable long-term growth. Even under lower oil prices this quarter, PetroTal is reporting free funds flow of more than $27 million, while holding our available cash reserves broadly flat near $100 million. The Bretana field is also performing as expected, with recent production topping 20,000 bopd.

As discussed in our July 14 operations update, we have encountered delays in the resumption of our development drilling program. As a result, we are revising our 2025 production guidance to a range of 20,000 to 21,000 bopd, from 21,000-23,000 bopd previously.

At the Bretana field, we are taking advantage of the gap in our drilling campaign to fully optimize our long-term plans for the asset, an exercise which takes on heightened importance given recent weakness in oil pricing. As indicated in the 2024 year-end reserves report, the field still has sixteen proved and probable locations remaining, and that is before we have even begun development of the VS1 sand in the Upper Vivian Formation. PetroTal is committed to developing the field in a responsible manner for all our stakeholders, at a variety of oil price assumptions. We have plenty of work ahead of us in the second half of 2025 and look forward to updating the market on our progress.”

A great deal of this report was in last month’s update, production data, cash levels and of course the rig delay which has led to the pause in drilling on Block 131. In his report above, Manolo says that ‘we are taking advantage of the gap in our drilling campaign to fully optimize our long-term plans for the asset, an exercise which takes on heightened importance given recent weakness in oil pricing’.

The Q2 production number of 21,039 was hit by lower realisations and the oil price is responsible for a slight knock to Ebitda. Reducing activity is responsible for a sharp fall in capex, expected to be $80m against previous guides of around $140m which means spend of only around $40m in the second half.

The flagship Bretana field has not been forgotten, the company say that ‘at the Bretana field, we are taking advantage of the gap in our drilling campaign to fully optimize our long-term plans for the asset, an exercise which takes on heightened importance given recent weakness in oil pricing’.

The company still has total cash of $142.1 million, including $99.3 million of unrestricted cash and confirming the long term confidence has declared  a quarterly dividend of $0.015/sh, payable to shareholders on September 12, 2025, and gives a yield of c. 11%. 

PetroTal is in very good condition and is taking advantage of the delay in commissioning the new rig to slow the effect of lower oil prices and maintain the excellent record of profitable growth at the world class asset that is the Bretana oilfield.

With the four failed pumps replaced by the end of July, ahead of schedule adding back some 4,400 b/d of production capacity and the river levels staying high meaning barge exports continuing at 100% of capacity until the end of last month should this stay the same there would be no ‘material reduction in export capacity.

I remain a strong buyer of PetroTal and whilst the slightly lower TP of 100p has come down a touch I think it is still perfectly achievable and still worth its place in the Bucket List.

PetroTal successfully replaced all four pumps ahead of schedule by the end of July 2025, restoring approximately 4,400 bopd of production capacity. As a result, field production averaged approximately 20,000 bopd in the month of July, compared to 18,899 bopd in June. Barge exports have continued near 100% capacity throughout the month of July; in the event that river levels remain above normal through the coming dry season, PetroTal would not expect to encounter any material reduction in export capacity.

Selected Financial Highlights

1.        Approximately 90% of Q2 2025 sales were through the Brazilian route vs 88% in Q1 2025.

2.        Royalties include the impact of the 2.5% community social trust.

3.        Non-GAAP (defined below) measure that does not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures presented by other entities. See “Selected Financial Measures” section.

4.        Net operating income represents revenues less royalties, operating expenses, and direct transportation.

5.        Adjusted EBITDA is net operating income less general and administrative (“G&A”) and plus/minus realized derivative impacts.

6.        Market capitalization for Q2 2025, Q1 2025 and Q2 2024 assume share prices of $0.50, $0.475, and $0.53 respectively on the last trading day of the quarter.

7.        Free funds flow is defined as adjusted EBITDA less capital expenditures. See “Selected Financial Measures” section.

8.        Includes restricted cash balances.

Additional financial and operational updates during and subsequent to the quarter ending June 30, 2025:

Block 95 Update

PetroTal produced an average of 20,512 bopd from the Bretana field in Q2 2025. Bretana production declined by approximately 2,150 bopd relative to the prior quarter, due to a combination of natural declines and previously disclosed pump failures in four producing wells in Q4 2024 and Q1 2025. PetroTal successfully replaced all four pumps ahead of schedule by the end of July 2025, restoring approximately 4,400 bopd of production capacity. As a result, field production averaged approximately 20,000 bopd in the month of July, compared to 18,899 bopd in June. Barge exports have continued near 100% capacity throughout the month of July; in the event that river levels remain above normal through the coming dry season, PetroTal would not expect to encounter any material reduction in export capacity.

During the second quarter, PetroTal completed the installation of the CPF-4 processing facility, increasing nominal oil treatment capacity at Bretana to 26,000 bopd, which has been established as a more optimum design for the Company’s current output than the previously mentioned 32,000 bopd. Oil production remains constrained by water treatment capacity, which currently stands at just over 170,000 barrels of water per day(“bwpd”). The remaining 2025 Bretana capital program is largely allocated to field infrastructure, including completion of the L2 platform, which will be required to accommodate additional development wells beginning in 2026.

Due to a combination of factors, including sustained lower oil prices, regulatory considerations, and delays commissioning its drilling rig, PetroTal has taken the decision to pause investment on several projects at Bretana in order to rigorously evaluate and optimize its long-term development plan for the asset. The Company intends to provide a revised field development plan, incorporating holistic forecasts for fluid handling capacity, integrated development of the VS1 and VS2 sands, and export transportation, in time for its year-end 2025 reserve report, which is typically published in February each year.

Block 131 Update

Los Angeles field production averaged 526 bopd in Q2 2025, down approximately 90 bopd compared to the prior quarter. PetroTal performed a cased-hole well logging program at the Los Angeles field in the second quarter, which necessitated the shut-in of targeted wells for brief periods. The Company is currently mobilizing the service rig which recently completed the pump replacements at Bretana to the Los Angeles field, where it will carry out a planned workover program on at least three wells. The workover program, which is scheduled to run into September 2025, is expected to increase field production by a total of approximately 500-1,500 bopd (on a peak monthly average basis). PetroTal is evaluating options to secure a drilling rig to initiate the Block 131 development program, pending technical review of the workover program.

Bretana Erosion Control Project

PetroTal expensed $0.7 million of erosion control costs in Q2 2025, down from $1.8 million in the prior quarter. As disclosed previously, the Ucayali River at the inland port of Pucallpa was unseasonably high throughout the local wet season. The staging yard at Pucallpa, where PetroTal’s contractor has been preparing equipment for the erosion control project, was flooded for approximately six weeks in March – April 2025.

River levels have since declined, allowing the construction consortium to resume activity, and a number of project milestones were completed by the end of July. The main piling barge, along with the first batch of fabricated steel components, recently arrived at Bretana and is expected to commence the test piles for the first breakwater within the next two weeks. In-line with previous disclosures, PetroTal estimates the project is approximately one month behind schedule, with a targeted completion date of Q3 2026. There are no material changes to cost estimates for the project at this time.

Cash and Liquidity Update

PetroTal ended Q2 2025 with a total cash position of $142 million, of which $99 million was unrestricted. The increase in total cash primarily reflects the first tranche of the previously announced COFIDE loan, which was drawn on May 20, 2025. Of the $42.8 million that PetroTal carried as Restricted Cash on June 30, approximately $31.9 million was related to the escrow account of the COFIDE loan. Available cash as of June 30, 2025 amounted to $99.3 million, compared to $84.1 million at the same time last year.

As previously announced, PetroTal has entered into hedge agreements for the sale of its crude oil, during periods when Brent oil pricing topped $80.00/bbl. These hedges consist of costless collars with a Brent floor price of $65.00/bbl and a ceiling of $82.50/bbl, with a cap of $102.50/bbl. As of the end of Q2 2025, the hedges covered approximately 44% of PetroTal’s remaining estimated sales volumes through the end of 2025. PetroTal recorded a $5.6 million gain on these hedges as of June 30.

2025 Guidance Update

Accounting for several factors discussed above, most notably lower than forecast oil prices and delays in the resumption of its development drilling program, PetroTal is updating market guidance for key 2025 financial and operational metrics. The Company now expects group production to average 20,000-21,000 bopd in 2025, down from the range of 21,000-23,000 bopd that was originally communicated on January 16, 2025.

Annual adjusted EBITDA guidance, which was previously based on the assumption that Brent oil prices would average $75.00/bbl in 2025, is being reduced to a range of $170 – 185 million, from $240 – 250 million previously. Updated adjusted EBITDA guidance is based on H1 2025 actual adjusted EBITDA of $116 million, plus estimated H2 2025 adjusted EBITDA at Brent oil prices of $65.00 – 70.00/bbl. PetroTal attributes the majority of the reduction (approximately $50-55 million) in forecast adjusted EBITDA to lower oil price realizations, with the balance due to lower forecast sales volumes, partially offset by cost savings. Note that adjusted EBITDA guidance is net of approximately $30 million in expenses associated with the erosion control project (consistent with prior treatment), which are expected to be non-recurring.

PetroTal is also reducing guidance for 2025 capital expenditures to $80 million, from $140 million previously. The reduction is primarily due to delays in resuming the development drilling program at Block 131, and to a lesser extent the deferral or cancellation of several non-essential projects due to recent weakness in oil pricing. Original guidance provided in January assumed approximately $35-40 million of capital spending at Block 131; however, the updated budget largely reflects a maintenance capital program at Blocks 95 and 131. Pending technical interpretation of the results of the workover program, and should a drilling rig arrive at the Los Angeles field before year end 2025, the Company may deploy additional capital at Block 131.

Importantly, PetroTal would like to re-emphasize its commitment to a robust capital returns policy. To the extent that oil prices and its funding obligations allow, the Company will continue to prioritize a stable dividend for its shareholders.

Q2 2025 Dividend Declaration

PetroTal’s Board of Directors has declared a quarterly cash dividend of USD$0.015 per common share, payable according to the following timeframe:

–       Record date: 29 August 2025

–       Ex-Dividend date: 29 August 2025

–       Payment date: 12 September 2025

This dividend is with respect to Q2 2025 results and includes the recurring USD$0.015 per common share amount but no liquidity sweep this quarter due to anticipated heavier cash requirements over the next two quarters.

The dividend is an eligible dividend for the purposes of the Income Tax Act (Canada) and investors should note that the excess liquidity sweep portion of all future dividends may be subject to fluctuations up or down in accordance with the Company’s return of capital policy. Shareholders outside of Canada should contact their respective brokers or registrar agents for the appropriate tax election forms regarding this dividend.

Corporate Presentation Update

The Company has updated its Corporate Presentation, which is available for download or viewing at www.petrotalcorp.com.

Q2 2025 Webcast Link for August 7, 2025

PetroTal’s management team will host a webcast to discuss Q2 2025 results on August 7, 2025 at 9am CT (Houston) and 3pm BST (London). Please see the link below to register.

https://brrmedia.news/PTAL_Q2_25

Union Jack Oil

Union Jack has provided the following update on West Newton, including initial plans for early monetisation of gas production through a new cryptocurrency mining operation.

Union Jack holds a 16.665% working interest in PEDL183, that incorporates the West Newton gas discoveries and is operated on behalf of the Joint Venture partners by Rathlin Energy (UK) Ltd (“Rathlin“).

·    Rathlin has conducted a feasibility study and evaluated the potential for an early development and monetisation strategy, using gas to be produced from the existing discovery wells to generate on-site electricity to power cryptocurrency mining activities

·    Rathlin, on behalf of the Joint Venture partnership which also includes Reabold Resources plc, has entered into a non-binding Letter of Intent (“LOI“) with a Texas-based company, 360 Energy Inc. (“360 Energy“) to design a Bitcoin mining solution at West Newton, subject to regulatory and third-party approvals

·    The Joint Venture partners believe that cryptocurrency mining offers an innovative and significant near-term value generating opportunity, providing early production and cash flow in advance of any planned full gas field development decision

Bitcoin Mining Evaluation

Rathlin, along with its Joint Venture partners, has been evaluating ways of generating additional value through early production schemes, ahead of any longer-term full gas field development.  In particular, Rathlin has been looking at development concepts that would co-locate gas-powered generators and cryptocurrency mining equipment at the West Newton A and B sites, which would be fuelled by the natural gas produced at those locations.

On behalf of the Joint Venture partnership, Rathlin has entered into a non-binding LOI with 360 Energy, a natural gas offtake and monetisation provider, headquartered in Austin, Texas, USA.  Under the terms of the LOI, both parties will work to scope, design and subject to regulatory and third-party approvals, deploy 360 Energy’s proven In-Field Computing (“IFC“) technology, designed to convert natural gas produced at West Newton to power on-site data centres, generating revenues from Bitcoin production.  Whilst at an early conceptual stage, preliminary economic estimates indicate that cryptocurrency mining could deliver very attractive returns.

The LOI envisages the IFC initially being deployed at the West Newton A site, converting natural gas from the WNA-2 well into Bitcoin, subsequently being expanded to encompass other discoveries.  The relationship with 360 Energy has the potential to enable the Joint Venture partners to realise significant returns from natural gas volumes via wells that would not otherwise contribute to either the early production scheme or the full field development.

The Joint Venture partners are working towards entering a binding definitive agreement with 360 Energy that is expected to be based on the terms outlined in the LOI.

About 360 Energy

360 Energy provides next-generation solutions for natural gas offtake and monetisation in the hydrocarbon industry.  The proprietary IFC platform captures stranded, flared or uneconomic gas and converts it to electricity for powering modular data centres on-site.  360 Energy is at the forefront of integrating advanced computing with traditional energy production to help project partnerships to earn more and flare less.

David Bramhill, Executive Chairman of Union Jack, commented: 

“Alongside our Joint Venture partners, we are delighted to offer a positive update on the possible development of a gas monetisation and Bitcoin mining concept at West Newton. We continue to believe that this asset holds material value which could eventually deliver significant volumes of onshore low-carbon sales gas into the UK`s important domestic natural gas market.

“West Newton is estimated to contain gross recoverable 2C gas resources of almost 200 billion cubic feet, according to an independent assessment undertaken by RPS in 2022.

“Regulatory uncertainty has unduly hampered progress and planning challenges have tarnished somewhat the perception of a number of commercially attractive onshore projects, such as West Newton, however, we are seeing some “green shoots” appearing on the horizon in this respect.

“Onshore developers and producers have been forced to “think outside the box” in order to make progress and deliver growth.  The Board of Union Jack believes this proposed concept to produce Bitcoin through mining operations is innovative, offers strong scope for a sustainable return and could lead to the Company introducing a new Bitcoin Treasury strategy, on success.

“In addition, we believe that 360 Energy’s association with West Newton is complementary to Union Jack’s position as a profitable, transatlantic oil and gas business with production in both the UK and USA.

“I look forward to updating shareholders in the future.”

This is good news for Union Jack as they bring forward the commercialisation at West Newton and in a highly creative and tech smart way. The stock market has been going crazy for companies that simply accumulate bitcoin just by buying it at market rates without any added value. Here the Rathlin team has gone a stage better, creating a version whereby they accumulate bitcoin profitably by mining it with very low cost energy of their own. 

This should help to unlock the big prize that is West Newton and it has been obvious around the world that substantial amounts of energy are required to deliver the crypto currency and such amounts look very hard to see in this country. Readers know that I am highly critical of the National Grid, to the extent that even adjacent to power sources that are reliant on the grid may struggle to find the necessary electricity to mine the bitcoin.

So the lack of a grid connection is of no matter to the WN partners, they will generate power on site and collocate the computer equipment right there without moving any electricity. And at the same time it is a speedy solution to unlocking the major prize that is West Newton. With concern about the timing of the upcoming process this must alleviate a great deal of that concern and bring West Newton firmly forward in management’s plans.

This is interesting in particular for Union Jack as they see the tie-up with 360 Energy as being somewhat analogous to their own association with Reach in the USA and in particular their position as having a ‘profitable, transatlantic oil and gas business with production in both the UK and USA’.

Reabold Resources

Reabold has provided the following update on Rathlin Energy.

Rathlin is operator of the PEDL 183 Licence which includes the West Newton gas development, located onshore UK in East Yorkshire. Reabold holds a c.69.9% economic interest in West Newton and PEDL 183 via its c.79.8% shareholding in Rathlin, which, in turn, has a 66.67% interest in PEDL 183. In addition, Reabold has a 16.665% direct licence interest in PEDL 183.

Highlights:

·      Feasibility study and evaluation of the potential for an early development and monetisation strategy at West Newton

·     The potential use of gas produced from the existing wells to generate on-site electricity and power crypto mining activities

·     Entered a non-binding LOI with 360 Energy to scope and design a potential bitcoin mining solution at West Newton, subject to regulatory and third-party approvals

·   Provides early production and cash flow in advance of planned full field gas development, offering a significant near-term value generating opportunity 

Bitcoin Mining Evaluation

Rathlin has been evaluating ways of generating additional value through early production schemes ahead of the planned longer term full field development at West Newton. In particular, Rathlin has been looking at development concepts that would co-locate gas-powered generators and crypto mining equipment at the West Newton A and West Newton B sites, which would be fuelled by the natural gas produced from the existing wells at those sites, namely; West Newton A-2 (WNA-2), West Newton A-1 (WNA-1) and West Newton B-1z (WNB-1z).

Reabold is pleased to announce that Rathlin has entered a non-binding Letter of Intent (“LOI”) with 360 Energy, Inc. (“360 Energy”), a natural gas offtake and monetisation solutions provider, headquartered in Austin, TX. Under the terms of the LOI, Rathlin will work with 360 Energy to scope, design, and subject to regulatory and third party approvals, deploy 360 Energy’s proven In-Field Computing (“IFC”) technology, which is a natural gas offtake solution, designed to convert produced natural gas directly into electricity to power 360 Energy’s on-site data centres, generating revenues from bitcoin production. While this engagement is at an early stage, this relationship has the potential to enable Rathlin to realise significant returns from natural gas volumes from wells that would not otherwise contribute to either the early production scheme or the full field development, and Rathlin’s preliminary economic estimates indicate that cryptocurrency mining could deliver very attractive returns.

The LOI envisages the IFC initially being deployed at the West Newton A site, converting produced natural gas from the WNA-2 well into bitcoin, and subsequently being rolled out for the WNA-1 and WNB-1z wells.

As such, bitcoin mining development plans will compliment both the early production scheme and the full field development. As announced on 13 June 2024, the pre-tax NPV(10) of the West Newton project was calculated to be US$179 million net to Reabold under the full field development plan.

Rathlin intends to incorporate IFC technology into its existing operations, as well as in its asset evaluation processes and capital allocation strategy moving forward. The parties are working towards entering a binding, definitive agreement that is expected to be based on the terms outlined in the LOI. 

Sachin Oza, Co-CEO of Reabold Resources commented:

“We are delighted to announce this initial step as an additional element of value creation from the West Newton field. Generating early revenue from the existing well stock also moves the West Newton project further forward in unlocking the full value of this significant natural gas resource. 

We believe that the creation and accumulation of new Bitcoin through mining operations offers a significantly enhanced, sustainable return, and one which is superior to simple cash purchases and accumulation of Bitcoin on the balance sheet, popularly referred to as a Bitcoin treasury strategy.

The accumulation of mined Bitcoin, taking advantage of Rathlin’s access to extremely low cost energy, is both a precursor and supplement to the unlocking of the substantial low-cost natural gas at West Newton, which we believe will play an invaluable role in UK energy security in the years ahead.

In addition, the UK government’s AI Opportunities Action Plan, announced in January this year, set out new measures that will create dedicated AI Growth Zones. We believe that AI/data centres will be a key growth area of the UK economy in the coming years, and that West Newton’s onshore setting and low operating costs also render it ideal for powering co-located data centres at the existing well sites from domestically produced gas.”

This is very exciting news for Reabold as they bring forward the commercialisation at West Newton and in a highly creative and tech smart way. The stock market has been going crazy for companies that simply accumulate bitcoin just by buying it at market rates without any added value. Here the Rathlin team has gone a stage better, creating a version whereby they accumulate bitcoin profitably by mining it with very low cost energy of their own. 

This should help to unlock the big prize that is West Newton and it has been obvious around the world that substantial amounts of energy are required to deliver the crypto currency and such amounts look very hard to see in this country. Readers know that I am highly critical of the National Grid, to the extent that even adjacent to power sources that are reliant on the grid may struggle to find the necessary electricity to mine the bitcoin.

So the lack of a grid connection is of no matter to the WN partners, they will generate power on site and collocate the computer equipment right there without moving any electricity. And at the same time it is a speedy solution to unlocking the major prize that is West Newton. With concern about the timing of the upcoming process this must alleviate a great deal of that concern and bring West Newton firmly forward in management’s plans.