PetroTal Corp.

Hello and thank you for joining PetroTal's Q2 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, thank you. Thank you, Mark. And good morning, everyone. And thank you for joining PetroTal's Q2 2026 webcast. where we're going to discuss the financial and operational results we release overnight. My name is Manolo Zúñiga, 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 this morning, 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 we prepare comments. On slide two, before we get into the quarter results, I want to step back and remind everyone why we believe PetroTal represents a compelling investment. Starting with the asset itself, PetroTal is the largest oil producer in Peru. We have 110 million barrels of remaining 2p reserves. representing $1.2 billion of net present value, NPV10 value, against 32 million barrels produced to date. So we are still in the early innings of developing this field. Our track record speaks for itself. Since inception, we have invested $675 million in Peru, generated over $1 billion of EBITDA, and returned more than $150 million to shareholders, and also tripled the size of our Bretagne oil field. Turning to the catalyst ahead of us, we're excited to restart our development drilling program in the fourth quarter of this year. as we target a return over previous production levels of more than 20,000 barrels per day. Considering our production has recently been tracking around our annual guidance of 12,000 barrels per day, we expect to show significant growth in production over the next few months. We believe successful execution of this multi-well program represents a meaningful re-rate opportunity for the stock. On the right-hand side of this slide, you can see our current production, financial, and capital market snapshot. The first quarter, first half of the year, production averaged 13,726 barrels per day, ahead of our 12,000 BOPD annual guidance. We ended the second quarter with $137 million of total cash against just $37.5 million of total debt, a strong net cash position. As a reminder, our 26 guidance called for adjusted EBITDA of $110 to $120 million and capital expenditures of $80 to $90 million. On slide three, I'd like to give an update on our operations at Britannia and our preparation for the resumption of development drilling. In mid-July, we began a pulling campaign at Bretagne to replace producing tubing and electric commercial pumps in up to five wells. This work is already helping to mitigate production declines and sustain our production levels in the second half of the year. Turning to our development drilling program, preparations remain on track as we have increasing confidence in an early October spot. The Estrella rig, which we have contracted for an eight-well campaign, It's now in Peru, and we hope to have it at Bretagne by the end of this month. As you can see on this map, we have highlighted the first two wells in our upcoming drilling program, wells PT and PV, circling red in the north half of the Bretagne structure. We are particularly excited about these drilling locations, which directly offset well 10H that has already produced more than 2.1 million barrels of oil. We look forward to notifying the market once the first whale has a spot, and we remain focused on returning PetroTal to sustainable production growth in 2027. On slide four, I want to show you how we get to our 20,000 whales per day production target for 2027. Whale by whale. The great shaded area of the left shows our historical production base at Bretagne and Los Angeles going back to January of 2021. You can see the periodic steps up as new wells have come online, followed by natural base declines in between drilling campaigns. That decline has continued through 2026, consistent with what we have discussed on prior calls as we pause development drilling. The color layers on the right-hand side of the chart shows our production recovery profile as our eight-well drilling program comes online, beginning with our first spot in October. Each color band represents one new well added sequentially to the base as our drilling completion crew move down the program. This production plot has been built using the median type curve from the 19 horizontal wells we have already drilled at Britannia. So this reflects the actual proven productivity we have demonstrated in this field. As you can see, as each well is layered on top of the declining base, our total production builds through 2027, reaching a monthly average rate of 20,000 barrels per day by the middle of the next year. I believe you will probably see us show daily production rates of 20,000 barrels per day by the first quarter of 2027, but it may take us until the middle of next year to sustain production at that level for a month or more. As mentioned before, the first two locations offset the 10-H well. You may recall that this well delivered the highest initial production of any of the 19 wells we have drilled to date, a 30-day average rate of just over 9,000 barrels per day, being able to target Offset locations near one of our best performing wells give us real confidence in the productivity of these first two new wells. However, as you can see on slide four, we are assuming that these new wells will average just 5,000 barrels of oil per day. Before handing the call to Camilo, I would like to remind our investors that PetroTal's proposition is that we should be able to replicate Bretagne's success more than once. especially now using all the experience we have acquired during the past eight years. I look forward to not only reporting on Britannia's production revamp, but also about future similar opportunities that some of our investors have repeatedly asked about. With that, I will now hand the call over to Camilo to discuss our financial results.

Thank you, Manolo. Turning to slide five, we have laid out PetroTal's financial performance for the second quarter. compared both to the prior quarter and to the same period last year. Production averaged 12,557 barrels per day in Q2, which was down 16% from Q1 2026 and down 40% from Q2 2025. As we've discussed, this reflects our natural decline in our production base during a pause in our development drilling. And it is a trend we will reverse shortly. Despite these lower volumes, our net back economics tell a much stronger story. Brent oil prices have increased $15.46 per barrel quarter over quarter and $24.56 per barrel year over year. And that flowed through to our bottom line. net operating income per barrel has increased by $12.78 and $22.59, respectively, over those same periods. This is a really good illustration of how our business is built to capture upside when oil prices strengthen. On costs, our operating expenses were essentially flat quarter over quarter, you know, in total dollar terms at $11 million. The increase you see on upper barrel basis from $8.46 to $10.11 is a function of spreading a relatively fixed cost base across fewer barrels. It is not a deterioration in an underlying cost structure. Our adjusted EBITDA for the quarter was 43.5 million. That is up 24% from Q1 26. On a year-over-year basis, it was down modestly, reflecting the substantially higher production base in Q2 2025. Our free funds flow came in at 32.4 million, up 26% quarter-over-quarter, and 19% year-over-year. Our net income was 4.8 million for the quarter, which reflects the impact of a $10.2 million non-cash impairment charge related to the sale of the Amazonia One drilling rig. Excluding that item, our underlying earnings debt continues to strengthen alongside higher realized pricing. On a year-to-date basis, Our first half 2026 adjusted EBITDA was 78.7 million, which puts us in good shape to hit our annual guidance of 110 to 120 million. First half 2026 capital expenditures were modest 15.6 million, with the bulk of our capital spending expected in the second half of the year as our development drilling program gets under way. We ended the quarter with 137 million of total cash, including 105 million of available cash. Available cash was out modestly from Q1 and Q2 2025 levels. On slide six, we show our full year 2026 guidance summary. which you'll also find in our corporate presentation, so I won't spend too much time walking you through every line, but I do want to use it to frame where our cash position is headed for the balance of the year. As we discussed on the last slide, our available cash position was largely flat throughout the first half of the year, ending Q2 at 105. That reflects two significant cash outflows in the first six months. First, a sizable tax payment and the retirement of a lease liability associated with our former drilling rig following its sale. We usually tend to see large cash outflows in March and April as we settle our prior year tax bill. And also looking at the guidance summary itself, based on a 12,000 barrels of oil per day of average annual production and an $83.60 per barrel rent assumption, we expect to generate $180 million of net operating income and about $117 million of EBITDA for the full year. And this is all after Russian control spend, GNA, and realized derivative losses or gains. Against that, we are planning for an $85 million of capital expenditures. That represents a meaningfully more active back half of the year as our development drilling program ramps up, along with about $24 million of accrued tax and finance expenses. That leaves approximately $8 million of after-tax refunds flow for the year, with no cash dividends contemplated in this guidance. Now, putting it all together, even accounting for that step-up in company spending in the second half, and after the tax and lease-related draws we saw in the first half, we expect to build our available cash position from approximately $105 million today to approximately $120 million by year-end. That reflects the combination of production growth, continued strength in oil prices, and our disciplined cost controls. And it's all a good illustration of how our cash generative power of this business, even while we're refunding, our next leg of growth. So with that, I will turn the call back over to Mark. Please let us know if you have any questions.