PetroTal Aktie

Hello. Thank you for joining PetroTal's Q1 results webcast. Your presenters today are Manolo Zuniga, President and CEO; and Camilo McAllister, CFO. As usual, questions can be submitted via the platform during the webcast, and we'll do our best to answer them in the time available. Manolo, can I hand over to you? Thank you.

Thank you, Mark, and good morning, everyone, and thank you for joining PetroTal's Q1 2026 webcast, where we're going to discuss the financial and operational results we released overnight. My name is Manolo Zuniga, and I am the President and CEO of PetroTal. I am joined today by Camilo McAllister, our Executive Vice President and Chief Financial Officer. If you have clicked on the link in this morning's press release, you should hopefully see our slide presentation on your screen.

But before I begin, I should mention that there are some disclaimers towards the end of the main presentation on our website, which I encourage you to read after our prepared remarks. On Slide 2, we have provided a summary of our key operational and financial metrics. Starting on the left-hand side, we highlight our recent production performance.

In the first quarter of 2026, PetroTal delivered average production of approximately 14,900 barrels of oil per day, modestly lower than the prior quarter. As we will discuss later in the presentation, we remain comfortable with our full year production guidance of approximately 12,000 barrels per day. Reflecting the recent strength in oil prices, we have increased our EBITDA guidance to a range of [$10 million to $110 million], a significant increase from our prior outlook of $30 million to $40 million.

There is no change in our capital expenditure budget at this time. While we invest $7.6 million in the first quarter, we expect activity to accelerate in the second half of the year as we resume our development drilling program. Based on our updated outlook, using forward current oil prices, we plan to end the year with a cash balance roughly in line with current levels.

On Slide 3, I would like to show our oil production and water injection capacity so far this year. The blue line shows the results of our recent water injection stimulation program, which we discussed in our press release this morning. Prior to the stimulation program, our water disposal capacity had been fixed at 170,000 barrels per day for quite some time.

Following the stimulation program, our water injection capacity briefly spiked to almost 200,000 barrels per day before settling at around 180,000 to 185,000 barrels per day over the past week. Our water injection capacity is important because the more water we are able to dispose, the more oil we can produce.

Current water cuts in our field range from 90% to 96%, averaging around 93.6%. So every 10,000 barrels per day of increase in water disposal allows us to produce approximately 500 more barrels of oil per day. Of course, the new oil wells will bring down the average field water cut. Our medium-term goal is to reach 240,000 barrels per day and eventually 320,000 barrels per day of injection capacity and beyond.

We have already seen a small boost in our production as a result of the stimulation campaign, and we would expect to see additional bump when we complete pulling jobs on 3 wells in Q3 2026. I would also like to point out that we have included our budget expectation in the red line in this chart.

This is the same line we published with our Q3 2025 results back in November 2025, and I am pleased to report that we have been trending about 3% above expectations year-to-date in 2026. As we pointed out in our press release this morning, we have not made any changes to our production outlook at this point, but it's nice to be carrying a small buffer as we approach the midpoint of the year.

Thank you, Manolo. Now turning to Slide 4. We have summarized PetroTal's financial performance for the first quarter of 2026. And as Manolo noted earlier, our average production during the quarter was 14,907 barrels of oil per day, which represents a modest decline relative to Q4 2025. Despite slightly lower production, PetroTal generated an adjusted EBITDA of $35.1 million in Q1 2026, which is an increase of 90% compared to the prior quarter.

Our business model is built to capitalize on higher oil prices. And with the recent strength in Brent, a large portion of our price gains flow directly into our earnings. If you look past the one-off expenses from late last year, the underlying growth in our EBITDA is very clear. To see the resilience of our model, it is helpful to look back at Q1 2025. Back then, we were producing over 23,000 barrels a day, even though Brent prices were similar to what they are today.

Our net operating income only decreased by about $2 per barrel. Maintaining those margins despite lower production volumes really proves how well we've controlled our costs. While higher oil prices provide a great tailwind, they will not distract us from our commitment to cost discipline. Reducing costs remains a core pillar of our 2026 strategy.

We are aggressively targeting lower spending in both operations and G&A, not just on a per barrel basis, but also in total dollars. This ensures that when we return to production growth next year in 2027, we'll be doing so from a much leaner and more profitable foundation. Moving to Slide 5. We are providing an update to PetroTal's 2026 EBITDA guidance in light of the recent strength in crude oil prices.

As a reminder, our original '26 guidance issued in January was based on an assumed Brent oil price of $60 per barrel. Under that pricing scenario, PetroTal expected to generate approximately $30 million to $40 million of adjusted EBITDA for the year. And as highlighted in this morning's results, PetroTal has already generated approximately $35 million of adjusted EBITDA during the first quarter of 2026, despite benefiting from elevated oil prices for only part of the quarter.

Looking ahead, we know the market remains volatile. However, if we look at current price trends as a guide and assuming an average Brent price of $83 per barrel for the rest of the year, PetroTal is positioned for a much stronger 2026. Under this scenario, we would expect to generate roughly $180 million in net operating income, which is double our original forecast.

If these price levels hold for the remainder of the year, the resulting adjusted EBITDA would move into the $110 million to $120 million range. At that level, our operations would fully fund our $80 million to $90 million capital program, while also covering all the taxes and financing costs. To be clear, these figures reflect the change in the market, not a change in our operational plan.

We're sticking to our production target of 11,500 to 12,500 barrels per day, and we'll continue to manage our cost structure aggressively. We will provide further updates as the year progresses and the price environment becomes more certain. Wrapping up with Slide 6, I want to briefly touch on our crude oil marketing dynamics.

Given the recent divergence between the spot and the future markets, we are often asked what pricing PetroTal is currently receiving for its crude sales. And as we've discussed on our last quarterly webcast, pricing for the Brazil export route, which represents the vast majority of our sales volume is linked to the high Brent month 3 price.

Prior to the escalation of the geopolitical tensions earlier this year, the Brent curve was relatively flat, making our realized pricing fairly straightforward to estimate. However, over the past 2 months, the market has become a lot more volatile and the Brent curve has moved into backwardation, meaning future delivery months are trading below the current month. In fact, Brent month 3 pricing has recently traded approximately $5 to $10 per barrel below the near month for extended periods.

While we would obviously prefer to capture the highest possible realized price, it is important to note that even the third month of the Brent strip has at times exceeded $100 per barrel in recent weeks. Accordingly, when we reference realized oil prices in our guidance and cash flow sensitivities, those assumptions are based on a Brent month 3 pricing rather than current spot prices. With that, I will turn the call back over to Mark, and please let us know if you have any questions.

First question. Given April was one of the highest price months for oil in recent history, can you expand on why you've chosen to conduct maintenance, which has the effect of reducing production, albeit temporarily?

So as I explained in my remarks, we did not do maintenance. What we did is work on the water disposal wells to optimize the activity of those wells, which are allowing us to increase production. So what we did is very quickly allow us to be able to produce more oil to take advantage of the prices.

With the Iquitos refinery offline, it seems the Brazilian routes accounted for 98% of Q1 volumes. Could you provide an update on the refinery status and timing for normalization?

Yes. The issue is that the reason we are not delivering oil from Bretaña to Iquitos is that Petroperu and unfortunately, the state oil company is having financial issues and they're not paying on time. We cannot afford delivering oil and not getting paid. So that's why the Bretaña oil nowadays is going to the Brazilian route. We do sell a little bit from the Los Angeles field, but we try to manage very carefully how much Petroperu owes us.

Next question. Given forecast for a strong El Niño this year, is it fair to expect limited impact at current production levels?

We don't know yet. The El Niño has different patterns. Usually, it rains a lot in the coast, in the northern coast of Peru. But sometimes it could either rain or be dry on the Andes, which fit the Amazon River. So we don't know yet. It's too early. But right now, the river levels are quite high. So we should be okay, I believe.

And then on to the rig. Can you give us any general information on the jurisdiction the rig is in and the time line for its export? Are the risk provisions of the contract in terms of getting a rig to our camp and commencing drilling typical for the oil and gas industry? Are there any provisions investors should be aware of?

No, all provisions are typical. The rig is currently about to finish activities in Colombia, in the south of Colombia in an area called Putumayo, which borders with Ecuador. When it's rigged down and prepared for transportation or logistics, it will go first by railroad across the border from Colombia to Ecuador to a port in Ecuador, and it will navigate to the Napo River all the way to the Peruvian border and then to our field. This is about a 1,000-kilometer journey, and it's all on time to continue with our program of drilling in October.

And just to add, most of our production equipment, we purchased from Ecuador and we use exactly the same route, so we're very familiar with that.

If the oil pricing continues and EBITDA is as indicated for the year as per the presentation, will you issue a special dividend?

At this time, the company is not considering a special dividend. Let me remind everybody kind of our capital allocation framework. First, obviously, we want to execute our capital program. Our focus is on resumed drilling and continue to optimize our water fluid handling capacity.

Second, we would first reduce debt. And third, we could evaluate some return of capital options. But this is something we will not consider until we have stabilized our production at the levels that we want and that we are expecting to be in during 2027.

Can you please identify the source of cost savings of circa $2.5 million versus Q1 '25 and $9 million versus Q4 '25 and how sustainable these savings are?

There are 2 sources of savings. There are savings in G&A and there are savings from our operating costs. The bigger variance that you just described against the fourth quarter of 2025 has to do with the pooling jobs and the workovers that we performed at the end of last year. We did not perform any of those during the first quarter. So that is the main variance.

At this stage, there are no further questions. Let's just give it a second to see whether any others come through. Okay, can I hand it back, Manolo, Camilo for any closing remarks?

Yes. Thank you so much, Mark, and I would like to thank all of our investors for their support. We're very excited about having a drilling rig back in Bretaña drilling and increasing production once again as we guided last year. Thank you so much.

Hello. Thank you for joining PetroTal's Q4 2025 webcast. Your presenters today are Manolo Zuniga, President and CEO; and Camilo McAllister, CFO. [Operator Instructions]

So I'll now hand over to Manolo. Many thanks.

Thank you, Mark, and good morning, everyone, and thank you for joining PetroTal's year-end 2025 webcast, where we are going to discuss the financial and operational results we released overnight. My name is Manolo Zuniga and I am the President and CEO of PetroTal. I am joined today by Camilo McAllister, our Executive Vice President and Chief Financial Officer.

If you have clicked on the link in this morning's press release, you should hopefully see our slide presentation on your screen. But before I begin, I should mention that there are some disclaimers towards the end of the main presentation on our website, which I encourage you to read after our prepared comments.

On Slide 2, we have our usual summary of our key financial and operational metrics. In the left-hand column, we have highlighted key production data from 2025 and 2026.

In 2025, PetroTal delivered average production of approximately 19,500 barrels of oil per day, representing a 9% increase over 2024. However, production declined throughout the year with Q4 2025 production averaging approximately 15,300 barrels per day, reflecting operational constraints at Bretaña. As we have previously disclosed, these constraints are primarily related to water handling and reinjection capacity, which remain the key bottleneck to restoring the more than 5,000 barrels per day of shut-in oil production.

Looking at 2026, we're off to a stable start with year-to-date production averaging approximately 15,000 barrels per day, including a small contribution from the Los Angeles field.

From a financial perspective, PetroTal generated adjusted EBITDA of $166 million in 2025 and free funds flow of approximately $90 million, demonstrating the resilience of the business despite lower oil prices and reduced production in the fourth quarter. Importantly, we ended the year with a large available cash position of $112 million, which provides the flexibility required to execute our operational priorities in 2026.

On Slide 3, we have a chart summarizing our reserve growth since the company began operations in 2018. While 2025 was a transition year operationally, I am pleased to report that our reserve volumes were largely unchanged. We maintained 60 million barrels of proven reserves and 110 million barrels of 2P reserves, after having produced just over 30 million barrels of Bretaña -- from the Bretaña field to date.

Our development strategy continues to be supported by a robust technical model and a large original oil in place, which underpins our confidence in the long-term growth potential of the field. As we move into 2026, our focus is on restoring production momentum by resuming development drilling, which we believe will unlock further reserve upgrades over time.

In our press release this morning, we announced that our Board has approved the award of a contract to a third-party drilling contractor, a key step in resuming our development drilling program later this year. The Peruvian regulators have also approved our Modified Environmental Impact Assessment for the Bretaña field, which gives us permission to drill up to 23 more development wells at the field.

As shown in Slide 4, based on the 2P forecast, shown in dark blue, this will allow us to maintain a 20,000 to 25,000 barrels of oil per day plateau for several years, starting about a year from now. Water handling will of course play a key role in our ability to do so, which is something our new Chief Operating Officer is already working on.

On Slide 5, I'd like to take a moment to provide an update on our erosion control project, which remains a critical component of protecting the long-term integrity of the Bretaña field. As many of you know, this is a significant infrastructure investment for the company, designed to safeguard our river bank and ensure the long-term sustainability of our operations.

In the past week, we have made the decision to terminate our contract with the project construction consortium due to noncompliance with contractual and execution requirements. Our focus now is on moving quickly and decisively to reestablish execution momentum. We have initiated a procurement process and expect to select a replacement contractor by June 1. Once the new contractor is selected, we will be able to provide a revised project time line and cost estimate.

I would like to emphasize that this is a manageable execution issue, not a change to the strategic importance of the project. Strengthening the river bank remains essential to the long-term development of Bretaña, and we are fully committed to completing this work to a high standard.

With that, I will now hand the call over to Camilo to discuss our financial results.

Thank you, Manolo. Moving to Slide #5 (sic) [ Slide #6 ], we have summarized PetroTal's financial performance for 2025.

And as Manolo mentioned, our average production for the year was 19,473 barrels per day, while fourth quarter production averaged 15,258 barrels per day. The company generated an adjusted EBITDA of $166 million in '25, and that compares to $237 million in 2024, primarily it's reflecting the lower realized oil prices and reduced production in the fourth quarter. Our net income for the year was $44 million, and that compares to $111 million in 2024.

Now despite these headwinds, PetroTal generated free funds flow of $90 million, which represents an improvement over 2024. This was all supported by a significant reduction in our capital expenditures, which totaled approximately $75 million in 2025, compared to over $170 million in 2024. In the fourth quarter specifically, adjusted EBITDA was $18.5 million, reflecting the impact of lower production and oil prices during the period.

Finally, we ended the year with $139 million of total cash, which includes approximately $112 million of unrestricted cash, which provides a strong liquidity position heading into 2026.

Wrapping up with Slide #7, I want to briefly touch on our cash flow outlook at prevailing prices. As we have discussed in the past, PetroTal maintains a high degree of operating leverage relative to oil price fluctuations. And while the move from our $60 per barrel budget guidance to the current $100 per barrel environment is a significant tailwind, it is important to remember our realized pricing at Bretaña is linked to ICE Brent Month 3. This means there's a natural delay before these triple-digit spot prices fully flow through our top line. However, as these higher forward prices begin to settle into the 3-month look-ahead, the impact on our cash flow profile could be positive compared to the start of the year.

While our focus is to remain disciplined and realize that the market volatility can shift quickly, the current environment could boost our liquidity. Accounting for the ICE Brent Month 3 pricing, we expect that once the current $100 Brent environment is reflected in our sales cycle, our monthly cash flow could average approximately $17 million. This provides us with a robust cushion to execute our strategic priorities even if prices normalize later in the year.

But keep in mind that our production is expected to decline throughout the year from our current levels. And at our average production guidance of approximately 12,000 barrels of oil per day, we would expect to generate average monthly cash flows of approximately $12 million if we were to assume $100 Brent oil pricing. However, I would like to stress that these numbers are for illustrative purposes only. No 2 months are exactly alike.

And I would also like to add that we are not making any changes to our guidance at this point. Commodity prices are very volatile at the moment, and it should go without saying that our revenue and cash flow can be expected to fluctuate with the price of oil.

Our priority in 2026 is to execute our cost efficiencies that we provided guidance on and our capital program of $80 million to $90 million, which will result in reinvesting in the business with a focus on what Manolo has already mentioned, which is expanding our water handling capacity at Bretaña, advancing the erosion control project and resuming the development drilling by October of 2026.

Importantly, PetroTal remains in a strong financial position with no near-term capital commitments and a robust cash balance, allowing us to execute this plan while managing commodity price volatility. Over time as production growth resumes and cash flow improves, we expect to revisit our return of capital framework.

With that, I would like to now hand the call back to Mark, and please let us know if you have any questions.

Thank you very much, Camilo. Okay. First question, are there any opportunities to increase water handling in 2026 in advance of the October drilling program?

Indeed, we are actually working to try to expedite the increase in the water handling capacity from the current 170,000 barrels per day to hopefully 240,000 by year-end. So that will be fantastic.

Just to give you an idea, an extra 70,000 barrels of water handling, at a 10% oil cut, that you can have like 5,000 barrels more of handling. So that's the importance of doing this, which sort of matches the amount of oil we have now shut-in because of water handling.

Thank you, Manolo. Are you expecting a considerable or negligible upward revision in cost to complete the erosion control project? What's caused the delay? And hopefully, the $31.1 million has gone to good use.

Thank you for this question. And let me address it by probably just going back to what Manolo mentioned. We had to take the decision to terminate our contract with the consortium due to noncompliance on their contractual execution requirements. The pace was not what we expected and the safety performance as well. So we have taken decisive action to intervene this and make some tough choices, but necessary changes.

Now let's step back a minute. The erosion control project, you might all remember, was guided as an 18-month project with a range -- an investment range between $65 million to $75 million. To date, if you take the middle of the range, $70 million, we have executed about $35 million. As of the year-end, it was $31 million; as of today, it's roughly $35 million.

That investment has been well made, and it's obviously there and we've made progress. But we want to do it -- we want to finish it and we want to continue to execute on it. We need a new pair of hands to help us to do that. And we'll come back to the market when we have those details with a more precise time line and revised cost.

Thank you, Camilo. Please, can you provide an update on Block 107, which needs 2 exploration wells drilled, completed before February 2027 expiry date? Is the plan to use the drill rig that's mobilizing in Q2 this year to drill these Block 107 wells?

We're still working on the permit to be able to drill the well in Block 107. Recently, Perupetro has given us an extension given the delay on the drilling permit. So that's very good.

And about the drilling rig we're taking to Peru, that's going to be staying in Bretaña as we have a lot of oil to be developed at Bretaña. So we will need to bring somebody else, another rig for Block 107. And of course, we are looking for a partner for Block 107.

Okay. Next question. Now that the MEIA-d has been approved, are you in a position to begin construction of the new well cellars that were outlined in the original 2025 budget? And if so, has that work already begun?

Yes. We are already working on it. So we will have the cellars completed by the time we start drilling wells. And the idea is to have cellars also to continue the drilling campaign in the following year.

Thank you, Manolo. Are there any plans to drill at Block 131, which was producing 4,000 barrels a day a decade ago?

Given our focus on drilling in Bretaña, what we have decided to do is bring a partner for the Los Angeles field that will be best -- so that's what we're working on, to bring somebody to help us on that.

Next question. Can you give us an update on the approximately 1.9 million barrels still sitting in the ONP? Are there any active discussions around the sale or settlement of those volumes, particularly in light of the ProInversion process?

The oil is still sitting in the pipe. It's going to stay there for quite a while. I think in discussion with ProInversion, trying to help them, the idea and what they're trying to do is bring an international pipeline company to take over the pipe and also bring someone for Block 182, which could allow oil to start flowing again. But it's going to take some time.

Will the first well to be drilled be a new production well or is a water injection well? Is there enough surface water handling capacity to enable a new water injection well to operate at full injection capacity?

The first wells are going to be oil wells. We want increased production. So what it will force us is to shut in some of the high water cut wells. That's how, as I mentioned in my notes, we plan to be at more than 20,000 by next year.

Eventually, and as I also mentioned, we intend to increase water handling capacity before year-end. So that will also help quite a bit. Eventually, we need to increase the water handling capacity from the 170,000 currently to 240,000 that I mentioned, eventually to 500,000, even 800,000 barrels per day of water handling.

Are there any intentions to hedge at these new oil prices?

Yes, we have been hedging since December. We've executed hedges for about 1.5 million barrels of forward oil production through March of 2027, covering approximately 24% of our estimated production.

These hedges have been primarily consisting of costless collars. On average, we have a Brent floor price of $60, a ceiling of $73 and a cap of $93. We obviously continue to monitor opportunities as the Iran conflict continues to be longer than everybody expected and the forward curve continues to increase. So this is something that we are actively looking at. But so far, we've hedged about 24% to 25% of our production.

Thanks, Camilo. There appear to be no further questions at this stage. Can I hand back to you, Manolo, for any closing remarks?

Thank you, Mark. And as always, I would like to thank our investors. We are working really hard to bring production back in Bretaña, as I mentioned. We intend to be above 20,000 a year from now, and we will do that. And we will complete the erosion project as we intended. So thank you so much to everybody.

Good afternoon. Thank you for joining PetroTal's 2026 Guidance webcast. Your presenters today are Manolo Zuniga, President and CEO; and Camilo McAllister, CFO. Questions can be submitted via the platform, and we'll do our best to answer as many as possible in the available time.

I'll now hand over to Manolo and Camilo. Thank you.

Thank you, Mark, and good morning, everyone, and thank you for joining PetroTal's 2026 budget and Guidance webcast. As mentioned by Mark, my name is Manolo Zuniga, and I am the President and CEO of PetroTal. And joining me today is Camilo McAllister, our Executive Vice President and Chief Financial Officer. If you join via the link in this morning's press release, you should see our 2026 budget presentation on your screen.

Before we begin, I would note that there are customary disclaimers at the end of the presentation, which I encourage you to review after our prepared remarks. This year's webcast is a bit different from prior years. Rather than presenting a growth-oriented budget, we're outlining what we view as a disciplined reset, one that is designed to protect liquidity, structurally reset our cost base and preserve the option value of the Bretana asset while oil prices remain under pressure.

With that context, let me begin on Slide 2, where we summarize the key production and financial metrics underlying our 2026 guidance. Starting with production, our 2026 guidance assumes an annual average of approximately 12,000 barrels of oil per day, which reflects the reality that any material production additions are unlikely to occur until late in the year. For context, production averaged over 19,000 per day in 2025 and exited the year at just over 15,000 barrels per day.

Despite lower production, PetroTal expects to generate approximately $90 million of net operating income and $30 million to $40 million of adjusted EBITDA in 2026, supported by aggressive cost reductions across both operating expenses and G&A. Our Board has approved a capital expenditure budget of $80 million to $90 million, which includes ongoing erosion control spending and assumes a resumption of drilling in the fourth quarter, subject to market conditions.

Importantly, this budget is designed to preserve liquidity. We expect to exit 2026 with approximately $60 million of available cash, which we view as a minimum operating floor for the business until production and cash flow improve. Camilo will provide more detail of the -- on the financial framework later in the presentation. But at a high level, this slide highlights the key theme for 2026, protecting value today while keeping the company positioned to grow when conditions improve.

Turning to Slide 3. We have restated PetroTal's core investment thesis. PetroTal remains Peru's largest crude oil producer and Bretana is an extremely high-quality oil asset with competitive economics at $60 Brent and is still under development. Critically, Bretana can continue growing profitably without requiring external capital, something our team is committed to do. PetroTal has already returned over $150 million to shareholders, underscoring our ability to generate free cash flow and our commitment to capital discipline.

Against that backdrop, 2026 represents a deliberate reset, not a retreat. The goal is to protect liquidity and asset value during a period of low oil prices while preserving meaningful upside leverage when the cycle turns. Slide 4 outlines the 3 core objectives and repeating our 2026 budget. First, protect liquidity. Capital allocation decisions are governed by a minimum unrestricted cash balance of $60 million. The capital program is aligned with internal cash flows and the budget targets approximately $30 million of adjusted EBITDA supported by improvement to our cost structure.

Second, reset the cost base. The budget incorporates significant reductions in our OpEx, lifting costs and G&A expenses, including a material headcount reduction in our workforce. These are structural changes, not temporary deferrals, and they materially lower PetroTal's breakeven. Third, we position for growth while 2026 is not a growth year. The budget assumes the option to resume drilling by October 1, with two development wells planned to be spudded during the fourth quarter of the year with the second one to be completed early in 2027.

This is expected to be the start of an eighth well campaign that will return production and capacity to what it was in the early 2025, assuming we're able to reset our cost structure as we aim to do. Taken together, this budget is designed to bridge the company through a period of low oil prices while preserving the long-term option value of Bretana. On Slide 5, we summarize the main elements of the 2026 budget. The approved capital program totals $80 million to $90 million, with development drilling expected to resume in the second half of the year.

I say second half instead of fourth quarter as I am still hopeful that we can expect sooner than later. Approximately $30 million to $35 million relates to the remaining erosion control expenditures. The cost structure reset is significant with a targeted reduction in OpEx of more than 25% and G&A approaching 20% versus 2025 levels. At year-end, we expect to maintain approximately $60 million of available cash, assuming an average Brent price of $60 per barrel, which is the planning assumption used throughout the budget.

The production chart on the right-hand side of this slide provides important historical context. PetroTal has grown production from under 1,000 barrels per day in 2018 to nearly 20,000 per day in 2025. The decline in 2026 mainly reflects a deferral in capital spending due to delays commissioning our drilling rig. With drilling expected to resume in Q4 2026, we fully expect to restore production capacity above 20,000 barrels per day before midyear 2027. In the past, we have seen similar behavior with continued drilling. Let's not forget that according to our 2024 year-end reserve certification, we still have 16 2P wells to drill.

I will now turn the presentation over to Camilo to discuss the basis of our strategy.

Thank you, Manolo. Slide 6 lays out the strategic reserve for the Bretana field. Our first priority is balance sheet strength. We maintain a strict cash floor to ensure we can cover onetime costs without internal stress. This capital discipline allows us to protect our liquidity today so we can reaccelerate activity as soon as the market visibility improves. Second, we are optimizing operations before reaccelerating growth. This includes a shift to third-party drilling and a focus on execution certainty over aggressive time lines.

Third, we are aggressively optimizing our cost structure. We are currently stripping out inefficiencies in G&A and operating costs while renegotiating service contracts to ensure a leaner base plan. These structural changes are designed to expand our margins regardless of the price environment. Fourth, we continue to preserve and enhance long-term asset value through phased infrastructure investment, particularly around erosion control and water handling capacity.

Finally, capital is allocated to our highest return projects. The development inventory delivers strong economics even under lower oil price assumptions and growth is based to liquidity, not oil price optimism. Moving to Slide 7. I will now focus on the financial assumptions underlying the 2026 budget. First, the budget is constructed using a $60 Brent planning price and assumes no material external financing.

Despite lower production, our cost reductions will allow the company to generate approximately $30 million to $40 million of EBITDA, fund the approved capital program and most importantly, maintain the $60 million cash floor. This budget restores flexibility. By structurally lowering costs and completing the erosion control, PetroTal improves its leverage to higher oil prices in future years. From a balance sheet perspective, the company enters 2026 with over $110 million of available cash, providing a strong starting position even in lower price environment.

On Slide 8, we have a high-level bridge that ties together the operational and financial assumptions underlying our 2026 guidance. We are modeling our production of 12,000 barrels of oil per day, and our financial planning is anchored by a $60 Brent price assumption, which aligns with current market consensus and provides a robust baseline for our capital allocation strategy. At that price level, we expect to generate approximately $80 million to $90 million of net operating income. From there, you can see the key cost items that shape EBITDA in 2026.

Erosion control operating expense is expected to be approximately $18 million, reflecting the OpEx portion of the project as it moves towards completion. G&A is budgeted at approximately $30 million, which includes an allocation for severance as we proceed with headcount reductions in our Houston and Lima offices. After these items, EBITDA for the year is expected to be approximately $30 million to $40 million.

Moving down the table, total capital expenditures are budgeted at $80 million to $90 million, which includes the remaining erosion control spend and the capital framework that preserves the option to resume drilling later in the year. Accrued tax and finance expenses is expected to total approximately $19 million, resulting in after-tax free funds flow of negative $60 million to $70 million for the year.

Importantly, that cash outflow is both intentionable and manageable. No cash dividends are assumed in 2026, and the budget is structured to conclude the year with approximately $60 million of cash on hand, which we view as our minimum liquidity threshold. So the key takeaway from this slide is that 2026 is a balance sheet protection year. The budget absorbs known obligations, completes critical projects and preserves financial flexibility while keeping the company well positioned for a return to growth when conditions improve.

I will now hand the call back to Manolo for closing remarks.

Thanks, Camilo. To conclude, 2026 is about a disciplined repositioning. This budget protects liquidity, resets cost, optimizes our operations and preserves the ability to return to growth. It is designed to safeguard shareholder value today while maintaining meaningful upside tomorrow. We believe this approach differentiates PetroTal and positions the company well for the next phase of the cycle. Thank you for your time. We'll now open the line for questions.

Thank you, Manolo. Thank you, Camilo. First question, can you please bridge current circa 15,000 barrels a day production at Bretana to the average 11,500 barrels a day for 2026, especially the assumptions around field and well downtime. The second part of the question, is there sufficient water handling capacity at Bretana to return to 20,000 barrels a day sustainably given that the field is currently constrained by water handling throughput?

That's actually a very good question. The reduction from 15,000 currently to the 11,500 for the year, it shows the normal decline on the oil production of the wells. These wells are all set up with electric submersible pumps, so I was saying the flow rates are consistent. Some of the wells can pull up to 15,000 barrels of fluid per day. On average, they are about 12,000 per day. So as the water cuts go up, the oil production drops. And that's why at the end, we end up with an average of about 11,500 to 12,500 -- the 12,000 that we have mentioned.

We do have wells that are now shut in because of the water handling constraints that the second part of the question mentioned. That gives us the ability that in case we have an issue with any producing well, we can open some of the other wells that are shut in. Right now, we have about 5,000 barrels of oil per day shut-in due to water handling constraints. So when the drilling starts again, these wells come in with higher oil cuts and what we do is we shut the higher water cut wells. And that way, we can quickly go beyond 20,000 once again. So that's the -- and eventually, we have to set up additional water handling capacity to be able to have as many wells open and that way also ensure that we can produce all of the 2P reserves.

Thank you. In light of operational challenges, please can you quantify what PetroTal's estimate of 2P reserves that will be extracted before the license expires will be?

Well, we are going to be publishing the 2P reserves next month. So work has been ongoing with Netherland, Sewell that certifies our reserves. But what I mentioned earlier sort of covers the concept, is adding sufficient water handling capacity so we can maximize the recovery of each one of the wells.

As I mentioned in my remarks, we still have a total of 16 wells, 2P, 8 in the 1P category and another 8 wells on the probable category. That number may be revised and -- should revise upwards, I believe, because as we continue producing, there's much more certainty in the durability of the wells, but we will see. But the key is us being able to manage the water handling facilities in the future to be able to extract all of the oil.

Okay. Next question. You state that the Amazonia-1 rig is no longer required in the near term and that you are now seeking to negotiate an exit from the leasing arrangement. To better understand what has occurred, I would appreciate a more detailed explanation of the key lessons learned that directly informs the decision to transition to a third-party drilling contractor.

There's a couple of things. When we decided to acquire the Amazonia rig is that we could not find any similar rigs in the region. We need a 2,000-horsepower rig, and we could not find one. That's when we decided to buy the Amazonia. Now there are some rigs available in nearby countries that we are procuring at the moment. And looking at the challenges of an oil company running a drilling rig by ourselves or using a third-party rig to lower the risk, we decided to go ahead and contract a third-party rig. So that's the logic behind this.

Can you give us more detail on the financing that you mentioned in the RNS? What would be your preference?

We don't necessarily need any financing for 2026 budget, as I stated on my remarks. At the end of the day, the company has enough cash flow to undertake its program. And our objective is to obviously preserve liquidity and maintain the $60 million cash buffer that we talked about.

Thank you, Camilo. What's the sensitivity of the guidance to the oil price? For every $1 change, how much does EBITDA change?

Our EBITDA per barrel is about roughly $10. So if you take our volumes, that would mean that it's about $3 million to $4 million impact for every $1 change.

Can investors expect a resumption of dividend payments in 2027 onwards, assuming the 8-well drill campaign is executed successfully and production volumes do reestablish?

We will see. But as we're going to be deploying capital for the drilling campaign, it's probably going to be difficult. I have, in the last webcast mentioned, probably we need to see into 2028 to be able to do that unless oil prices recover.

Okay. Another question with a couple of components to it. I have a few questions on the CapEx. One, the RNS talks about potential settlement costs for the acquired rig. Are these potential costs already provisioned in the budget? If not, what's the order of magnitude? Second part, the 2026 CapEx program includes circa $45 million for wells and drilling. It looks high versus the $15 million per well cost. Is the difference associated with rig mobilization or something else?

Thank you. Good question on the first point. Yes, these costs are already provisioned in the budget. And on the second question, the $45 million goes beyond drilling. So it's the fully burdened cost of having the facilities ready, the rig mobilized and therefore, the benchmark of $15 million, which is just the well cost is obviously a lower estimate. So $45 million is all in, fully burdened well cost.

Could you please elaborate more on the capital allocation of 2027 with 2 plus 6 wells by the end of 2027, what will production be in 2028?

That -- assuming that we drill the -- all of the 8 wells, as we -- our goal has always been to be above 20,000 barrels per day. So that's what we are targeting. But we don't have yet a budget approved for 2027, just to put a caveat.

Okay. What's year-end '26 and year-end '27 expected water handling capacity?

We're going to go in 2 steps. Right now, we have about 170,000 barrels of water per day. The idea is to go to 240,000 and then 320,000, and 240,000 will probably be by year-end '27 and 320,000 by year-end '28. That's the plan right now. And just to add more color, you go from 170,000 to 320,000, that's 150,000 barrels of water. You have an plan and oil cut of 10%, that gives you the ability to produce a lot more oil, as you can imagine. So that's the reason why, the more water we can handle, the more oil we can produce.

Okay, there appears to be no further questions at this stage. So can I hand back to Manolo and Camilo for any closing remarks.

Well, yes, Mark, thank you so much. And as always, I want to thank all of our investors. The set of questions that you guys have asked today they were fantastic, allow us to explain some of the rationale for 2026 and 2027. Thank you so much.

Good afternoon, and thank you for joining the PetroTal Q3 Webcast. Manolo Zuniga, President and CEO; and Camilo McAllister, Executive Vice President and CFO, are your presenters. You can submit questions via the platform, and we will do our best to answer as many of these as possible in the time available.

Without any further ado, I'll hand over to Manolo and Camilo.

Thank you, Mark, and good morning, everyone, and thank you for joining PetroTal's Third Quarter 2025 Results Webcast. My name is Manolo Zuniga, and I'm the President and CEO of PetroTal, and I'm joined today by Camilo McAllister, our Executive Vice President and Chief Financial Officer. Today, we're walking through the financial and operational results that we published overnight. If you access this webcast via the link included in today's press release, you should be seeing our slide presentation on your screen.

Before we get started, I'd like to point out that there are disclaimers located at the end of the main presentation and also on our website. We encourage you to review those after the prepared remarks. I will now pass the microphone to Camilo to give a brief overview of our third quarter 2025 financial results.

Thank you, Manolo. Turning to Slide #2. I wanted to give a quick summary of our third quarter financial results. The message may have been lost in the rest of the press releases today, but it's worth noting that our financial results were actually quite good at this quarter. Our production averaged over 18,400 barrels of oil per day in the third quarter. which was a 21% increase over the same period last year. We benefited from unusually wet weather this year, which boosted river levels compared to 2024. We were able to export essentially 100% of our production capacity during the dry season this year, which was a very good outcome.

Oil prices rebounded a little bit in the third quarter, but our net operating income fell slightly compared to the prior quarter. Even though our operating costs normalized following some expenses from pump replacements in the second quarter of 2025, our transportation costs were a bit higher this quarter. Lastly, even with a slight increase in capital spending, we still generated just over $12 million in free cash flow during the third quarter bringing our year-end-to-date free cash flow to more than $87 million. We have already returned approximately half of that free cash flow to our investors through dividends and buyback prior to the suspension of our fourth quarter dividend, which we also announced today.

I will now pass the microphone back to Manolo to walk through our operational results.

Thank you, Camilo. Moving to Slide 3. I would like to have an open discussion about some of the operational challenges that we are facing right now. Overall, I think our track record has been very good for the past few years. But unfortunately, we seem to be dealing with a number of headwinds at the moment. We have already disclosed a series of pump failures and tubing leaks in 2025. And while I have been very happy with the swift response from our operational teams, the reality is that we need to prepare for the possibility that we may experience additional failures in 2026.

Our people are preparing contingency plans right now to ensure we can minimize production next year in the event that more wells fail. Water handling has always been an important consideration for PetroTal, but the issue has become more pressing in 2025 after we brought 7 wells on stream last year. If you consider that each of our horizontal wells produce more than 10,000 barrels of fluid per day, the excess water handling capacity must be built out in advance of our development wells. Otherwise, we may have to shut in existing production to accommodate new wells, which is obviously not ideal.

Moving into 2026, we had originally expected our drilling rig to arrive at Bretaña early in the year. However, for a variety of reasons, that time line has now been pushed back by at least 6 months with limited ability to generate organic production growth for the medium term, it seems clear now that our base production is likely to decline throughout the first half of 2026. When we combine the impact of falling production with a weak oil price outlook, we have been faced with some difficult choices as we finalize our 2026 development program.

We would like to resume development drilling as quickly as possible, but ideally, once we have sufficient water handling capacity in place. The team is working on enhancing the activity on our existing water disposal wells to bring back up to 5,000 barrels of oil per day of currently shutting production.

Turning to Slide 4. We have tried to summarize the range of production outcomes we are seeing in our development plan right now. The dark blue line shows our actual monthly production so far in 2025. As you can see, the general downward trajectory is expected to continue until at least the middle of 2026. The dotted green line shows our best case production scenario, which assumes we are able to move a rig to Bretana by the middle of 2026. In this scenario, we believe it would still be possible to drill and complete 3 development wells by the end of the year.

Depending on production deliverability, it's possible PetroTal would exit 2026 with production in excess of 20,000 barrels per day. Enhancing our water disposal capacity, as mentioned before, will put us somewhere in the middle of both curves. The lower dotted blue line shows our low case production scenario, which basically assumes we are not able to complete any drilling activities in 2026. I think this scenario is unlikely for [indiscernible] possibility that we do not drill any wells next year. In this case, we would likely center our capital program on investments in water handling capacity, preparing for improvements in oil pricing in 2027.

I should point out that we are also considering other scenarios that are not pictured here. For example, it's still possible we could send a drilling rig to Block 131, where we don't have to invest in water handling capacity before bringing new development wells. We are also looking at options to secure a third-party drilling rig, which will give us more flexibility to resume drilling in the event that our own drilling rig continues to be delayed. In any case, we plan to finalize our 2026 budget in January, at which point, we will provide more specific details on our development program. So please stay tuned.

I will now hand the microphone back to Camilo to discuss the financial implication of our announcements today.

Thank you, Manolo. On Slide 5, we have prepared a summary of the initiatives we are undertaking to preserve liquidity as we navigate this period of uncertainty. Although we have a rough idea of the activities we must undertake in order to restore production capacity at Bretana, the reality is that we won't know our through funding requirements until we have finalized our 2026 development plan. However, we do know that with production declining and considering the prevailing outlook for oil prices, we would not be able to support both a reasonable development program and a regular dividend in 2026 without substantially drawing on our available cash reserves.

So at our Board Meeting this week, when faced with a decision to let approximately $14 million out of the company in December, we felt it was in the best long-term interest of PetroTal and its shareholders to suspend the dividend immediately. I would like to stress that dividends are not the only lever we are pulling to preserve liquidity. Our Board of Directors has given us a clear directive to cut costs so that we are better positioned to return capital to shareholders at a wide range of oil prices. We will immediately focus on OpEx, where we have a very high fixed cost base at Bretana.

We will also be targeting substantial G&A cuts as this is a metric on which we have not compared favorably with our peers. We will provide additional color on our cost-cutting initiatives with our 2026 guidance in January. But the reality is that any savings we achieve will be paled in comparison to the $55 million of dividends that we pay out annually. The simple fact is that dividends are by far the most powerful lever that we have at our disposal to preserve liquidity. We certainly hope to resume our return capital program as soon as possible. But that would only occur once PetroTal has achieved a structural reduction in its cost base.

I will now pass the microphone back to Manolo to provide some closing remarks.

Thank you, Camilo. I would like to wrap up by pointing out that although our stock is understandably not reacting well to our announcement today, our conviction in PetroTal's investment case remains strong. As shown in Slide 6, the challenges we're experiencing right now are entirely aboveground issues. I would like to remind you that our team have resolved many big issues before, including COVID and multiple river blockades. Right now, we're working around the clock to resolve our current issues as well. Bretaña is still a great asset, and I am confident that the barrels will still be waiting for us once we have expanded our water handling capacity, resume drilling and oil prices have improved.

In the meantime, we are well capitalized to wait things out while we formulate a sensible development plan for the Bretaña field. PetroTal has drilled 19 horizontal wells at Bretaña, and we still have 16 wells left out in our 2P reserves, plus underdetermined amount of inventory in the VS-1 formation. In other words, we're still very much in the middle of this [indiscernible]. These new wells, especially those in the VS-2 sand will require additional water disposal investments. The first 19 wells have seen Bretana generate over $400 million of free cash flow, of which we have returned more than $155 million to shareholders, and we paid a $100 million bond. These are real tangible returns that we have generated for shareholders and which we hope to replicate again in the future.

In conclusion, I would like to thank our shareholders for their ongoing support. We look forward to providing more details on our 2026 development program in January. That wraps up our prepared remarks. I would like now to turn the call back to Mark for questions.

Thank you, Manolo, Camilo. So first question, where is the new drilling rig? It's been over a year since it was supposed to arrive on site. Why didn't you rent the old rig for a longer period until the new one was in country?

The rig is in Houston in Conroe, Texas. It was supposed to arrive about midyear this year. So it's going to be about a year delay. And the old rig is decommissioned. And the old rig, we cannot use it for the new Bretana wells, which is why we decommissioned that rig.

Can you share the scenarios or assumptions that led the Board to the conclusion that dividend had to be completely suspended? Could 2026 estimated CapEx exceed $100 million despite only 2 wells being drilled? And any guidance on 2027 CapEx?

So I mentioned in the remarks just now, we shared a couple of production profiles. Let's hypothetically assume a $60 oil price next year and a 15,000 barrel a day average production. With our current cost structure and discounts to Brent, that would mean the company would have a total source of roughly $175 million. And we have a starting cash balance, say, of $100 million for next year. Now our uses and that we have to pay interest, taxes, debt amortization, CapEx at CapEx levels, say, around $130 million, that leaves our ending cash at about $16 million.

We have spoken to all of you in the past that we want to maintain at least $60 million in our cash flow. That is a little bit too conservative. But to us, it's prudent because we don't really know what's going to happen to oil prices next year. So as we finalize our budget, we want to make sure we have enough liquidity to have a good year.

Thank you, Camilo. Is water handling capacity maxed out? And how is this level compared to expectations a year ago?

The water handling capacity, it is currently maxed out. And part of the plan is to be able to expand that on an ongoing basis. And the target right now is to bring it up to 240,000 from the current 170,000 barrels per day. And as we drill more wells, we're going to have to continue expanding that water handling capacity. It is part of the plans. It is just taking longer to implement all of that.

Okay. Next question. Please tell us about the leakages on the 5 wells. Does this indicate that preventative work will have to be done on the other older wells?

The issue with the tubing that brings the oil up to the surface is that we have a corrosion caused by CO2 in the oil and the water. And that's -- the chemicals that we were injecting we're not reaching the proper point. So we have now -- we understand now the issue. We have already replaced a number of pumps where we have provided the corrective measures and the ongoing cooling campaign will do that. Of course, there are other wells that were set up in the past. Right now, we don't see any evidence of any failures. So we're hoping that nothing happens next year, but we just wanted to caution our investors that maybe we'll have more than one well that will also fail because of the same situation. But the important thing is that we now understand the issue, and we have taken the corrective measures.

What happened to you expecting between 500 and 1,500 barrels a day in additional production from Los Angeles after the workover?

When we did the workovers, we noticed that the existing cement behind [pipe] was actually not completely stopping the water from below. And that then has forced us to evaluate how to remediate that while we plan to bring a drilling rig to start drilling an initial well -- development well in Los Angeles. So that's why production at Los Angeles has not increased. But now we have also a good understanding of what's going on, and we plan to ideally drill a well next year.

Are you going to buy back shares at these low prices?

We will continue to evaluate. I mean, our message today was clear in suspending our return to shareholders, and this is obviously one way of doing it. And depending on what share price does, it's something we continue to evaluate.

Thank you, Camilo. What are the reasons behind the equipment failures, quality of product, poor installation, et cetera, will they be identified as possible risks beforehand and how can you ensure they don't happen again?

As I mentioned before, we now understand why is that the chemicals were not reaching the proper point. And now that we are changing the pumps and the tubings, we are actually setting up the electric submersible pumps much, much higher. That also reduces the cost of these replacements. It also reduces the amount of energy that we need to lift all of the fluids as the pumps are much, much higher and also allows us to ensure that we have the chemicals at the right entry point, and we should not have issues in the future.

Okay. What's PetroTal's all-in corporate breakeven oil price, including all costs and debt finance?

From a cash perspective, is about $60 per barrel.

Thank you, Camilo. There's an exploration commitment to drill 2 wells in Block 107 by February '27, will today's update affect this commitment and any update in finding a farm-out partner?

The commitment that we have, we plan to have an extension given to us. So that will give us more room to maneuver. And we continue to try to find a partner or partners to come in. There's a couple of companies looking at information. So we will continue looking to be able to drill a well in the future.

Can you explain delays behind the rig? You didn't explain why it was going to be delayed by at least 12 months. Can you expand at all?

Yes. We had issues during the commissioning of the rig. We ended up switching contractors, and that has delayed the process all of this time, unfortunately. So when you do a change in contractors, there's always delays, as you can imagine.

Okay. Can you give any more guidance on how much CapEx you may spend on increased water handling capacity? And when? And has this expectation changed over the course of the year?

The expectation, it doesn't change. We have a plan that we try ideally to have the water disposal capacity at about the same time as we have -- we drill new wells. I have explained this since I raised the initial capital 8 years ago. Unfortunately, it's always difficult to have a perfect match. And so now, as I mentioned earlier, from the 170, we want to go to the 240, eventually, we're going to go to the 300 as more wells come in.

Thank you, Manolo. Next question, it sounds like the need for increased water handling facility has been a bit of a surprise. Have the recent wells been seeing higher water cut levels than you expected?

The water handling facility has not been a surprise. We always knew this. I will always give examples to our investors that we have 20 wells, you're going to have to manage 200,000 barrels of fluid. And that's a 10,000 per well. If the wells produce 15,000 barrels per day, then you're going to have 300,000. So that's always been that. Our original 3P case had a total of 20 wells. So I will provide that example to the investors. Amazingly, we are now surpassing the original 3P case.

That's something I promised investors that we would do, that we are limited right now on total fluid handling of about 200,000, which, again, initially, that was my 3P goal, 200,000. Right now, if I open all of the wells fully, we will be at 300,000. So we're short. So we need to carry up to add more handling capacity. We believe we can go up to 240,000, and that will allow us to open up oil wells to bring an additional 5,000 barrels of oil per day in the next few months, and we're working on that, which is why in that graph in the presentation, I mentioned, with that, we will be somewhere between the 2 curves as shown.

Thank you, Manolo. Looking at the reserves auditors 2P profile and future development cost at year-end 2024, how much peak water handling capacity were they assuming? And how much of the $645 million of the future development cost in the 2P case was for water handling?

How much was water handling? I will need to go back and check that. I can -- I see the person that asked that question to answer that. I don't have the number exactly with me. But again, given that the wells on average produce about 10,000 barrels of fluid, on the 2P case, we have 32 wells. So we're going to need to manage 320,000 barrels of fluid per day and that is the follow-up goal. So from 170, 240, 320, and then we event -- actually, of the 1P case nowadays is 32 wells. The 2P is 40 wells. So that will mean that we will go to 400,000 in the future and beyond. And the more we can process, the more oil we can produce and the more money we can make because here, we are to add value, not only production.

Okay. Thank you. How much CapEx does the low case full year '26 production profile of 12,000 barrels a day assume?

We will provide that guidance in January as we finalize the budget.

Thank you, Camilo. And a follow-on, in light of production and the rethink on development, how are you seeing 2P reserves directionally versus year-end 2024?

Well, we have -- we are going to end up producing about 7 million barrels this year. And given that they have been no drilling, I imagine the reserves are going to drop accordingly. So 2P reserves were a substantial number of 108 million barrels. So we are going to still have a lot of oil to be produced. As mentioned in my remarks, we're in the middle of the game.

Thank you, Manolo and Camilo, if you want to move on to any closing remarks at this stage.

Well, I want to thank our shareholders for all their support. As we have mentioned, we have some headwinds against us right now. As also mentioned, these are all aboveground issues that we need to tackle and we are tackling. I have promised also investors that this project was going to be a free cash flow machine that requires that we complement the number of wells with the water handling capacity because it is to be truly a water -- a free cash flow machine in the future. So this is a hiccup that we're going to have for a year or so, and we will try to go back to paying dividends as soon as possible. Well, with that, I want to thank everybody.

Thank you, everyone.

Ladies and gentlemen, thank you for joining the PetroTal Q2 2025 Results Webcast. Your presenters today will be Manolo Zuniga, President and Chief Executive Officer; and Camilo McAllister, Chief Financial Officer. [Operator Instructions].

I will now hand over to Manolo and Camilo to commence with the presentation. Please take it away.

Thank you, Jimmy, and good morning, everyone, and thank you for joining PetroTal's Q2 2025 Results Webcast. My name is Manolo Zuniga, and I am the President and CEO of PetroTal, and I'm joined today by Camilo McAllister, our Executive Vice President and Chief Financial Officer. Today, we will be walking through the financial and operational results that we published overnight. If you access this webcast via the link included in today's press release, you should be seeing our slide presentation on your screen.

Before we get started, I'd like to point out that there are disclaimers located at the end of the main presentation and also on our website. We encourage you to review those after the prepared remarks.

Turning to Slide 2. You will see our usual snapshot of key financial and operational highlights. On the left side of this slide, we have summarized some key production data for both 2024 and 2025. As we mentioned in our press release this morning, we have revised our production guidance down slightly to a range of 20,000 to 21,000 barrels of oil per day. We had to revise our production guidance lower for a few reasons, including failures to the electric submersible pumps in 4 of our wells at Bretaña. Thankfully, our operations team responded quickly to replace the pumps by mid-July, but we probably lost around 1,000 barrels per day of our annual average as a result of the pump failures.

We have also experienced delays in the commissioning of our new drilling rig, which have pushed back the start of our drilling program at Block 131. We're exploring several options to try and resume drilling by the end of the year, but any production additions from these wells will now contribute to our 2026 numbers. When we released guidance back in January, we had assumed Block 131 would add between 2,000 and 4,000 barrels per day by the end of 2025. So that is another 500 to 1,000 barrels per day that we lost of our annual average.

The right-hand side of this slide also shows our updated EBITDA and CapEx guidance. We have revised 2025 EBITDA guidance down from around $245 million to a range of $170 million to $185 million. I would like to point out that at least $50 million of that reduction is due to lower oil prices with the balance due to lower sales volumes. Our capital spending guidance is also down substantially from $140 million previously to a range of $80 million to $100 million. The delay is assuming our drilling program accounts for around $35 million to $40 million of that cut, but our team has also responded quickly to lower oil prices in the second quarter by deferring a number of projects that were included in our original budget.

Here at PetroTal, we're very focused on matching our spending with our cash flow net of dividends. And I think our updated guidance today reflects that. You have hopefully worked out from our press release that our free cash flow is essentially unchanged compared to our original guidance that we released back in January.

On Slide 3, we have updated our production graph to show PetroTal's 2025 production through the month of July. We have now produced just over 4.5 million barrels this year, which is 17% ahead of the same time last year. Unfortunately, this is a little behind our production guidance, but we're still pleased with our operational results so far this year. And overall, the Bretaña field continues to perform well despite a lack of drilling activity. We discussed this a little bit in our press release this morning, but river levels in the Amazon Basin are tracking higher than normal heading into dry season. You may recall that last year, our export was severely restricted due to lower river levels. I am keeping my fingers crossed, but if river levels remain healthy, we should be able to maintain close to full exports throughout the dry season, which is currently settling in.

Last year, Bretaña production averaged just 12,750 barrels per day in August and September due to export restrictions, but we're currently producing around 8,500 barrels per day at Bretaña. So if we keep that going, our third quarter numbers should be very good.

Turning to Slide 4. I just wanted to discuss the main projects that are still contributing to our capital program in 2025. Even though we have not been drilling throughout the middle of the year, we have still been very active in the field with a few major projects that will set us up for 2026 and beyond.

First of all, we're looking forward to beginning our workover program at Block 131 as soon as next week as this will be some of the first real technical work that we have been able to do at the Los Angeles field. The goal of the workover program is to reperforate producing zones in 3 of the existing wells as well as opening new sands never opened before and install new pumps that will ideally boost production and give us valuable insights into the durability of the reservoir. This information will help us fine-tune our future drilling program once a rig is available.

Our erosion control, we are moving ahead with preparation work for the first breakwater. The main barge has arrived at Bretaña, where we expect to begin filing activities within the next 2 weeks. As we mentioned in our press release this morning, our staging yard was flooded for about 6 weeks in March and April. So we're working to make up some lost time in the second half of the year.

Also at Bretaña, our major field infrastructure project for the remainder of the year and into Q1 2026 will be the completion of the L2 platform extension. We are still waiting for a key MEIA or modified EIA approval before we can fully commence work on this project, but this platform will accommodate the surface infrastructure for our next 10 developmental wells. Although we haven't finalized our 2026 capital program yet, this project will need to be completed before we can start drilling again at Bretaña. You may recall that a big reason we had planned to drill Block 131 first this year was to give us time to complete the L2 platform at Bretaña.

I will now turn the call over to Camilo to provide commentary on our financial results.

Thank you, Manolo. And I will start by discussing some key highlights from our second quarter financials, which hopefully you have had the time to review this morning. The table on Slide 5 summarizes key financial information and operational data for the second quarter. Our production volumes were down 10% compared to the prior quarter, but we are still tracking about 15% higher than the same period last year. As you're probably well aware, Brent oil prices have dipped sharply lower in the second quarter. These were the lowest realized prices that PetroTal has received since the first half of 2021 when we were still producing less than 10,000 barrels of oil per day.

Fortunately, our business is in a much better shape than it was back then, and we still managed to report an adjusted EBITDA netback of more than $23 per barrel and free cash flow of more than $27 million. As you can also see in the bottom 2 rows of this table, PetroTal remains well capitalized to manage a period of lower oil prices. We had $142 million of cash on our balance sheet on June 30, which includes approximately $32 million held in escrow for the erosion control loan that we announced back in May. Our available cash reserves are essentially unchanged relative to the prior quarter and up around $15 million compared to the same period last year.

On Slide 6, we have prepared a waterfall chart to give you a sense of the key factors that are contributing to our reduction in EBITDA guidance this year. I won't spend too long on this chart, but the main point is that most of the drop in our EBITDA guidance comes down to oil prices. We had originally built a forecast around the $75 per barrel assumptions, but prices come in lower and the outlook has also softened. That shift has a meaningful impact on our numbers.

I would like to point out that our expectations for lower sales volumes have certainly contributed to the reduction in guidance as well. However, the magnitude of the impact is much smaller than it is for oil pricing. In fact, we have nearly been able to offset the impact of lower sales volumes through improvements to our cost structure and some minor derivative income. Overall, we have executed well. Even if oil prices haven't quite played along despite that headwind, we remain focused and optimistic about what is ahead.

Wrapping up with Slide #7, I would just like to end with a high-level discussion of our capital allocation philosophy. There is no doubt that some of the decisions we have made to defer and cancel capital projects in 2025 will impact our plans for 2026, but that is a trade-off we have to make as oil prices move lower. And here at PetroTal, we are proud of our track record of profitable growth. If you have followed our story for a while, you probably understand this has been a challenging project at times, but Bretaña is a world-class asset, and we have delivered excellent results for our investors over the past years.

As the company and this asset continue to mature, we remain fairly committed to delivering returns that meet or exceed our cost of capital, ensuring our investments create lasting value for our shareholders. For most of the past 5 years, oil prices have traded above $80 per barrel and our investment decisions have been relatively straightforward. But the forward strip prices are trading below $70 per barrel, especially next year, and we have to be more disciplined with our capital.

You may have also noticed that our most recent reserve report, which is publicly available on our website, assumes we will invest over $350 million on our existing reserve base over the next 2 years. I don't think I would be speaking out of school if I told you we are extremely unlikely to spend that much money if oil prices continue to trade below $70 per barrel. With that in mind, our team is actively conducting a comprehensive review of our future development program. And while horizontal wells remain a core part of our strategy, we are also exploring several less visible, but high-impact opportunities to enhance returns, such as facility optimizations and well design improvements. Our goal is to present the Board with a refreshed field development plan by year-end, ideally with input from a newly appointed full-time Chief Operating Officer.

That wraps up my prepared remarks, and I would like to turn the call over to Jimmy.

First question, can you offer any general comments on the direction, higher or lower of CapEx spending in 2026 relative to 2025?

Thank you for that question. I think at this stage and given that I just mentioned that we are in the process of working on that field development plan, it's early. We are going through those exercises right now. And of course, the pace of investment will depend on a number of factors including oil prices, also how quickly we can update our water handling facilities at Bretaña, the results at Block 131. And so there's -- and the new exciting opportunities or other investments that we're looking at on well designs and water handling. So at this stage, I would not give an indication of 2026 CapEx.

What has been the reason for the delay with the new drill rig?

It's been mostly the supply chain to get some key parts for the rig while we do the commissioning. So we're working on that, and we expect to have it in Peru and the operations probably at the beginning of 2026 or hopefully sooner.

What gives you confidence the rig will be in country to start drilling in early 2026? Could there possibly be further delays?

We have actually improved the team that is managing this project, and they give me confidence that we'll be able to deliver as we expect now. So we have the right team now working on this.

In today's press release, you mentioned regulatory considerations. Could you please clarify what specific regulations or processes you're referring to?

The key one is the modified EIA known as the MEIA. And the reason for that is that we are -- to be able to continue developing the field, we have had to expand the camp and that required that study. And it's been taking longer than expected. Although as we know, in Peru, permits take a long time, and we'll be back in Lima next week to continue pushing that. The expectation now is for this permit to come in, in August, maybe September, and you can get a sense then that everything is pushed. But given our current oil prices, it's not really affecting us. So just delaying things.

This question pertains to river levels and sales capacity. Is there a minimum river level that would still enable full evacuation capacity in the second half of the year?

Well, some of you keep track of in the website, how the river levels are going. It has changed quite a bit from last year that was one of the, I think, worst historical dry seasons. Now the levels are helping quite a bit, as mentioned in the notes. So we're expecting to be able to manage close to full capacity. There's always going to be a need to lower some. But as mentioned, we are ahead from last year.

And Manolo, maybe I might add, the issue with the river also has to do with how full you fill the barges. And so I think the constraint here is that we have enough barges to fill them with less volume, but still deliver total production. So that helps us.

Indeed, the fleet that our trading company has increased quite a bit. We have a large volume to be able to move things. So even if they fill them up at 80%, we're okay.

What were the main reasons that PetroTal decided not to bid for Lots 64 and 192?

For us to be able to deploy fresh capital in other projects with so many opportunities that we have in our own, I think it was not smart at the moment to try to jump in those projects. There's social, environmental issues, although some people in the government themselves was hoping that we were getting involved in those, but we decided that it was not good for our investors for us to get and risk money there yet. And we continue to look at opportunities even in Ecuador. Again, it took us a long time to do our first purchase with the Los Angeles field in Block 131, which we're now finally going to start doing the workovers and eventual drilling. We need to strike at the right time. That's key. So we talk about capital discipline. That's a key one on the M&A side.

Do you expect changes in government policies towards the oil industry after the next presidential elections in Peru in April of next year? And if so, what kind of changes would benefit PetroTal in particular?

Well, in politics, as we all know, it's difficult to predict things. I believe there are like 40 candidates for next year's elections. If anyone unless it's extreme left, things should, I hope, improve. We've been working to change some of the key regulations to fast track permits and we see how the MEIA is again delayed. So I'm expecting that whoever comes in, we will be supportive of that, especially given positive impact that we have caused in the Puniuaha district and the Loreto region with the benefit of all of the Canon and the 2.5% social trust fund. Now they see that a well-run oil project, it does benefit everyone. And that's going to help to make those changes.

[Operator Instructions] On to our next question. Has there been any progress in finding a partner apart from the 20% interest Gran Tierra already has for Lot 107? If the first well is to be drilled in the second half of 2026, what is the latest time that PetroTal needs to have a partner in place? Or can it go alone?

We have a couple of companies reviewing the information right now. And so we're very diligent on trying to get a partner to come in. We can actually drill the well later in 2026. And usually, Perupetro will give you an extension if they see that you are now getting very close to drill. But for that, you need to show that you are now getting mobilizing equipment and so on. So we still have time, and I'm glad that we have not 1, but 2 companies looking at information.

Has the royalty rate for Lot 131 been officially approved and changed?

Not yet. It is in process. These approvals usually take time as they have to be approved not only by Perupetro and the Ministry of Energy and Mines, but also the Finance Ministry and eventually goes to the country President to sign the Supreme Decree authorizing Perupetro to modify it. So we're still halfway in the process. But I'm expecting that it should be done before year-end. And the royalty that is now at 23.8% should drop, I think just below 10%. So it's quite an impact. It will improve the netbacks in Los Angeles, which, of course, is needed to be able to deploy capital drilling wells.

Including water handling, sellers, et cetera, what is the current maintenance CapEx per year to keep production flat?

That's a good question. It's obviously a lot lower than our guidance for this year. A lot of it depends on integrity investments that we have to make on repairs from when the operations began. You have to go back in time and remember that we started as an early production facility, and there are things that we're having to revisit and reinvest to make sure they are more permanent and long term. So that is part of that initial, let's call it, $50 million of maintenance. And that would be an answer to that question.

Yes. And this year is a good example of how novel the Bretaña field is. We've been -- we have not had a new well since early in the year, and we were able to maintain production. So that helps. That gives us the needed pause to really look into the future CapEx to try to continue developing the field very carefully. So the idea will be to be below $100 million.

Manolo, Camilo, thank you for your time. There are no further questions at this point. So I'll hand back to you for closing remarks.

Well, as always, I want to thank all of the listeners and investors that have been supporting the company. And we're working very hard to make sure that we -- next time we have more exciting news for all of you. All the best. Thank you.

Thank you.

Hello, and welcome to the Annual General and Special Meeting of Shareholders of PetroTal Corp. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the corporation that you first obtained all required consent for the disclosure recording transfer and use of such personal information from all appropriate persons before your disclosure. [Operator Instructions] It is now my pleasure to turn today's meeting over to Mark McComiskey, Chair of PetroTal Board of Directors. The floor is yours.

Thank you. Good morning, everyone. On behalf of the Board of Directors of PetroTal I'm delighted to welcome you to the Annual General and Special Meeting of the Shareholders of PetroTal Corp. The Board and management both very much appreciate your interest and attendance today. My name as you heard is Mark McComiskey and is Chair of the Board of PetroTal. I will act as the Chair of today's meeting.

I would also like to introduce Sudan Maccio, PetroTal's Chief Legal Counsel and Corporate Secretary; who will be in attendance online today at today's meeting. We also welcome those of you who are not shareholders to this meeting, but I remind everyone that only shareholders or proxy holders of PetroTal are entitled to take an active part in the formal business of the meeting.

On behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance of today's meeting. During the formal business portion of the meeting, please note that only registered shareholders or duly appointed proxy holders of PetroTal are permitted to vote or otherwise participate.

As the meeting is being held virtually via live webcast, we think it is necessary to set out guidelines for the orderly conduct of the meeting. To that end, questions in respect of a motion can be submitted by a registered shareholder or duly appointed proxy holder using the webcast portal's instant messaging service by clicking on the Q&A tab. Please note that there will be a slight delay in the publication of the messages received. When asking a question, please indicate your name, which entity represent, if any, and confirm that you are a registered shareholder or a duly appointed proxy holder. Questions will only be addressed during the designated question periods of the meeting, provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting.

Management will address as many appropriate questions as time permits. If multiple questions are received on the same topic or in a similar manner, they may be summarized and answered together. If any questions are not addressed during the meeting due to time constraints, responses may be provided after the meeting by posting on the corporation's website or by e-mail as appropriate.

If you are a registered shareholder or a duly appointed proxy holder and have already voted by submitting your proxy form in advance of the meeting, it is not necessary for you to vote again today since your vote will be recorded in accordance with your proxy instructions. Registered shareholders and duly appointed proxy holders may vote online during the meeting using the control number provided on their proxy or voting instruction form. For the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot.

Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all such business items. Only registered shareholders and duly appointed proxy holders of the corporation are permitted to participate in the voting. When you are asked to vote, you will receive a message on the virtual interface requesting you to register your votes. You will only have a certain amount of time to do so.

If we encounter any technical difficulties with the webcast, please remain logged on, and we will resume as soon as possible. The meeting will be recorded and made available on PetroTal's website.

We will now proceed with the formal portion of today's meeting. So with those points of order established, I will now call the PetroTal Annual General and Special Meeting to order. The first order of business is appointment of the Secretary and Scrutineer. Suzanne Ferguson of the Cornerstone Governance Corporation is in attendance today. And with the consent of the meeting, I appoint you to act as Secretary of the meeting. Jennifer Oliver of Computershare Trust Company of Canada, PetroTal's transfer agent is also in attendance today, and with consent of the meeting, I appoint her to act as scrutineer for the meeting. The Scrutineer will tabulate all votes received during the meeting and those received by proxy and will generate a final report at the end of the meeting.

The notice calling this meeting, the form of proxy and the management information circular dated May 9, 2025 in respect of this meeting were provided to shareholders pursuant to the notice and access provisions of National Instrument 54-101 and have been filed on SEDAR+. I ask that the affidavit of providing the due mailing of the notice and access notification required by NI 54-101 be filed with the records of the meeting.

The purpose of this meeting is to accomplished several items, the first of which is to receive the financial statements for the fiscal year ended December 31, 2024, and the report of the auditors thereon. Also to fix the number of directors to be elected at 8 to elect the directors for the ensuing year, to reappoint the auditors of the corporation to hold office until the next Annual Meeting of the Shareholders and to authorize the directors to fix the auditor remuneration, to consolidate the common shares on the basis of a ratio of between 5 and 10 pre-consolidation common shares for every 1 post-consolidation common share and to transact such other businesses may properly come before the meeting or any adjournments thereof.

The scrutineers provided me with a preliminary report on attendance and the count indicates at 54 shareholders are present or represented by proxy, representing 403,104,644 common shares. Accordingly, 44.02% of the outstanding common shares are currently represented at this meeting. As such, I declare that a quorum is present and that this meeting is properly constituted for the transaction of business. I direct that a copy of the scrutineers' report be filed with the records of the meeting.

In order to have the meeting proceed efficiently, we have asked shareholders of PetroTal to move the motions to be put before the meeting. This is not intended to preclude shareholder discussion in any way only to assist with the progress of the meeting. For the purposes of the meeting today, as discussed voting on all matters will be conducted virtually by a single electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all such business items. You will receive a message on the webcast when you're asked to vote, requesting you to register your votes and you will have a limited amount of time to do so. After you have registered your votes for all business items of today's meeting, the scrutineer will compile the votes in respect of each business item.

Again, if you've already submitted a proxy and have not revoked, your vote will be included in the ballot as required. Proxies launched before this meeting allow management of the corporation to cast a significant number of votes. Based on the number of shares represented at this meeting, the members of management here with me today are able to determine the outcome of all motions that will go to a vote today on the basis of those proxies. I therefore declare all the motions which may go to a vote today will be carried even though all of the votes may not yet have been counted on a final report and the final report may not yet be available. The scrutineer will tabulate all votes received in the meeting today and those received by proxies and generate a final report at the end of the meeting.

At this point, we will open the floor to answer questions from registered shareholders or duly appointed proxy holders.

There are no questions on the line.

There being no questions, we will continue at the meeting. The first item of business is the receipt of the annual financial statements of the corporation and the auditor's report for the year ended December 31, 2024. The annual financial statements of the corporation the corresponding auditor's report were made available to shareholders in accordance with securities laws requirements together with the notice of this meeting.

I request the secretary to file a copy of the annual financial statements and auditor's report with the minutes of this meeting.

I would now like to move the formal business of the meeting and the resolutions for consideration before the meeting today. There are 4 resolutions as follows: Resolution 1, to set the number of directors to 8; Resolution 2, the election of the 8 directors of the company for the ensuing year. The company's management has nominated the following persons for election as directors: Manuel Pablo Zuniga-Pflucker, Mark McComiskey, Gavin Wilson, Eleanor Barker; Jon Harris, Felipe Arbelaez Hoyo, Emily Morris, Denisse Abudinen. Resolution 3, to reappoint the auditor for the ensuing year. It is proposed that Deloitte LLP be appointed as auditors of the corporation for the ensuing year and that the directors be authorized to fix their remuneration.

Resolution 4, a special resolution to authorize the Board to consolidate the common shares of the corporation on the basis of a ratio of between 5 and 10 pre-consolidation common shares for each 1 post-consolidation common share. May I have a motion for each of the resolutions.

I move that. I move that the number of directors to be elected to be fixed at 8 that each of: Manuel Pablo Zuniga-Pflucker, Mark McComiskey, Gavin Wilson, Eleanor Barker, Jon Harris, Felipe Arbelaez Hoyo, Emily Morris and Denisse Abudinen be elected as directors to hold office until the conclusion of the next annual meeting of the company.

I will also move that Deloitte LLP be appointed as auditor of the company to hold office until the close of the next Annual General Meeting of the company and that the directors be hereby authorized to fix the remuneration to be paid to the auditors that it be resolved by a special resolution to authorize the Board to consolidate the common shares of the company on the basis of a ratio of between 5 and 10 pre-consolidation common shares for each 1 post-consolidation share.

Thank you. We'll pause now to allow for any delay in the broadcasting of the online meeting to allow questions to be submitted by registered shareholders and duly appointed proxy holders participating virtually.

I do not see any questions on the line.

Thank you. I will now ask that registered shareholders and duly appointed proxy holders vote. The polls are now open for approximately 1 minute, and I ask that you cast your votes.

[Voting]

Thank you. I now declare the polls closed. I have now been advised that the scrutineers completed the tabulation for each of the items of business. Based on provisional results, I declare that all resolutions have been approved and that the requisite majorities have been obtained. I would ask the scrutineer to compile the report regarding the voting results on all business matters, and I direct that the results be included in the minutes of the meeting. The results of the voting will be announced in a press release in accordance with the policies of the Toronto Stock Exchange and filed on SEDAR under the company's profile.

Is there any other formal business to be properly brought before the meeting?

We have not received any request from the online portal.

Thank you again. If there is no further business to be brought before this meeting, I move and second that the formal portion of today's meeting be concluded. On behalf of management, our Board of Directors and our employees, I would like to take the opportunity to thank everyone for attending the meeting today.

I would like to especially thank our shareholders for their commitment and continued support. We look forward to your attendance again next year.

This concludes today's meeting. You may now disconnect.