Comprehensive analysis of PetroTal as of 24 March 2025https://oilman.beehiiv.com/p/comprehensive-analysis-of-petrotal-as-of-march-24-2025Really good write up |
different brokers seem to use different tax rates. ii seems to be 15% |
Don't know pec but it works with my XO ISA, 15% tax instead of 30%. |
Is Trading212 W-8BEN friendly for PTAL shares in an ISA. |
Add my thanks also. |
Great work KS thank you |
KS you're a star. |
S93 - me neither! |
KS - brilliant, thanks for following up with the analyst.
I did a search to try to understand how free funds flow differed in definition from free cash flow. My takeaway is that there is a difference, but I don't truly appreciate it ;-) |
Thanks KS for your efforts. |
"As far as I can see, guidance is on free funds flow, which is a Canadian metric and different to free cash flow
Yes I take you point I should probably include it in my total working cap line
I think the answer is the dividend is probably not fully covered by free cash flow in 2025 (but they still have plenty of cash on the balance sheet to cover it), but is in 2026 on higher production and lower erosion costs" |
wow - i just get on admiring you sirs....
and try to learn so i will shame myself less and less
appreciate |
"Thanks Daniel,
I know forecasting isn't an exact science!
It does say on p32 of the PTAL presentation:
" • Free cash flow numbers are net of working capital adjustments of ~$20-25 million, interest income (~$2 million) and lease expense (~$12 million)"
So not sure about the working capital assumption?
I see, so the $18.6m looks to be 2023 and 2024 combined tax expense figures, which you are assuming is being paid in 2025 - why not add this to the $34.9m 'cash tax' figure in the summary so that it is then reconcilable? I see that you have done a similar thing with the difference between $34.9m and the 2025 tax charge - pushing this into 2027, but you have added this to the 'cash tax' figure for the year, which makes more sense to me!
As investors we're just trying to understand to what degree the dividend is covered in this low oil price environment.
Regards,
X" |
"Hi X,
You’re right, thanks for pointing that out.
The PTAL guidance is for US$60m of free funds flow, which as far as I can see does not include movements in working capital, it’s just EBITDA, less tax, less CAPEX, less interest.
My FCF of US$12.3m for 2025 is basically EBITDA of US$230m, less US$20m general working cap (after the big positive swing in H2 2024), less US$53.4m cash tax (including the full US$18.6m end 2024 tax payable). This broadly gets to my US$155.5m OCF. Then it’s less US$140m CAPEX, plus $1m net interest, and this gets to my FCF of US$12.3m.
So the delta you are looking for is the tax payable that I have included, but you’re right it’s not explicitly on my summary page.
I think my FCF is probably a bit low and I have been a bit harsh on working cap.
Hope that helps,
Dan" |
 So here is my conversation:
"Hi Daniel,
Hope you are well. Just looking at your note on PTAL...
1) I assume the 'Change to forecasts' table on page 2 should be for 2025 & 2026 E not 2024 & 2025, otherwise the figures don't tie in with the rest of your analysis?
2) Can I ask how you derive FCF of $12.3m for 2025?
The company presentation states they expect $60m FCF @ $75 Brent on EBITDA of c$245m. You have a lowered Brent target of $70 (fair) contributing to EBITDA of $230m, but FCF of only $12.3m?
On the lowered EBITDA of $15m you forecast $5m less tax paid in 2025 than PTAL (fair) so the net change should be around $10m lower than PTAL forecast?
I cannot reconcile your EBITDA number to the operating profit of just $155.5m? Ordinarily it would be something simple like EBITDA less tax less working capital adjustments - which would be $230m, less $35m, less $20m, which would give $175.5m not $155.5m? Your 2026/2027 numbers make perfect sense so I am confused.
Is there a large adjustment not presented in your summary for 2025? I wonder if perhaps you have double counted erosion control (in opex) somewhere?
The company stated in their 2025 presentation that the forecast FCF already includes adjustments for working capital. If we look at the company presentation slide on page 32 and lower the Brent price to $70 as you have done, then FCF is forecast closer to $35m - am I missing something obvious?!
Thanks!" |
kaos3 - that is because we had a special divi in early 2024 due to a higher oil price? $55m is the base dividend commitment.
FWIW I have emailed Zeus (Daniel Slater). He did respond to me once about his note on another company, Arrow Exploration so let's see... |
when masters are at it .... ZEUS
why is projected dividend 55 mil in 25, decreased from 60 mil in 24 , being 55 mil before that |
I would love to, but they don't seem to respond to retail investors.
I think there's more traction in asking the company, because that matrix in their slide pack still makes me a little uncomfortable |
It seems that someone should ask Zeus why there is a difference instead of guessing. |
I wonder if ZEUS haven't double counted the erosion control costs perhaps? Assuming they needed knocking off EBITDA, when a portion is actually in the opex anyway. |
Sorry, I'm struggling a bit...
I don't know how to reconcile Zeus forecast EBITDA to operating cash flow. It should just be EBITDA - tax +/- working capital adjustments, but in the case of their 2025 it simply doesn't work.
It LOOKS to me like, Zeus have adjusted EBITA TWICE for $20m working capital, then taken off tax to get to the operating cash flow figure of $155.5m - then deducted the same $140m capex, then presumably something else to end at $12.3m FCF.
They go from EBITDA of $230m to operating cash flow of just $155.m with only $35m 'cash tax' paid (and a $20m working cap adjustment) - so there is a rather large adjustment(s) being made somewhere that is not presented in their summary?
PTAL in their presentation state that the FCF of $60m at $75 Brent is already net of working capital adjustments.
So although ZEUS have only a $15m downgrade in EBITDA (due to oil price) they also have $35m v PTAL $40m tax forecast as a result, so the net difference should only be $10m, not $47.7m as it is. |
Thanks KS -
So can you work out why the 2025 figures are so different to the company's guidance |
"Not sure I'm smart enough to work out why (KS to the rescue?). The definitions seem the seem."
Hi - I think Zeus may be mixing up 2025 and 2026 numbers. The 'change to forecast' table should be 2025 and 2026, not 2024 and 2025 - there is no 'forecast' for 2024 as we have the FY actuals now (they just haven't updated the headers on this table). Note that they use E for estimate and A for actual in the tables.
There is a table to the left of the slides and at bottom (summary cash flow statement) that both show 2026 $93.5m FCF and 2025 $12.3m. |
Must be due to rerate |
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