RCS - Valeura Energy Inc. - Transformative Gulf of Thailand Acquisition

Parkson Retail AsiaAnnouncement

06/12/2022 16:15

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RNS Number : 7971I  Valeura Energy Inc.  06 December 2022

Transformative Gulf of Thailand Acquisition

Calgary, December 6, 2022: Valeura Energy Inc. (TSX:VLE) ("Valeura" or the
"Company") is pleased to announce that Valeura Energy Asia Pte. Ltd. (the
"SPV"), a special purpose vehicle and a subsidiary of the Company, has entered
into a Sale and Purchase Agreement with Mubadala Petroleum (Thailand) Holdings
Limited (the "Seller") to acquire the Thailand upstream oil producing
portfolio of Busrakham Oil and Gas Ltd ("Busrakham"), a subsidiary of Mubadala
Energy (the "Acquisition").

This Acquisition consists of operated interests in three offshore licences in
the Gulf of Thailand that include the Nong Yao, Jasmine/Ban Yen and Manora oil
fields, which collectively currently produce approximately 21,200 bbls/d of
oil, net to the interest being acquired. The purchase consideration for the
Acquisition is US$10.4 million plus up to an additional US$50 million,
contingent upon certain upside price scenarios.  The acquisition has an
effective date of August 31, 2022 ("Effective Date") and is subject to
customary closing conditions.

Acquisition Highlights

·    A substantial expansion of Valeura's presence in Thailand, adding a
portfolio of cash generative assets;

o  Operatorship of three additional offshore licences in the Gulf of
Thailand;

o  Current production add of 21,200 bbls/d of oil, net to the acquired
interests;

o  Weighted average cash operating costs across the assets of approximately
US$22/bbl, comprised primarily of fixed costs associated with offshore
facilities;

o  Immediate pre-tax cash flows of approximately US$30 million per month(1);

o  Total proved plus probable (2P) reserves of approximately 24.1 mmbbls
oil(2);

·    Deal consideration of US$10.4 million as of the Effective Date plus
up to an additional US$50 million, contingent upon certain upside price
scenarios;

·    Value accretive transaction, with no requirement for additional
equity to complete the Acquisition, and hence no dilution to shareholders;

·    Near-term production growth opportunity through Nong Yao field
development project planned to be onstream in early 2024;

·    Field life extension opportunities through ongoing infill drilling to
continue the assets' long history of reserves additions, amounting to
approximately 80% replacement of produced reserves over the past five years;

·    A largely autonomous business unit organisation comprised of an
approximately 180-person strong operating workforce in Thailand; and

·    Expected organisational and financial synergies with Valeura's
acquisition of the KrisEnergy Gulf of Thailand assets as announced in Q2 2022.

Unless otherwise noted, all production and reserves estimates in this
announcement are presented on a working interest acquired basis, net to the
SPV, which is controlled and 85% owned by Valeura.

(1) Management estimate, based on current operating conditions and US$85/bbl
Brent oil.

(2) Reserves estimates are based on the Company's internal assessment
(non-independent) as of December 31, 2021.

Sean Guest, President and CEO of Valeura commented:

"This is a transformative transaction for Valeura, firmly establishing our
Company as the largest independent operator of oil production in Thailand. By
adding 21,200 bbls/d net to the SPV, we expect to immediately generate pre-tax
cash flows of approximately $30 million per month, and this amount is expected
to grow in the very near term as we increase production to 25,000 bbls/d and
beyond with the addition of production from our pre-existing portfolio. We set
out to build a business that generates cash now, while providing re-investment
opportunities for the medium-term, and we believe that the two acquisitions we
have signed in 2022 accomplish these goals and more, creating significant
value for our shareholders without dilution.

Our forward efforts will focus on developing the potential of these assets, by
projects including further development of the Nong Yao field where we are
forecasting peak production rates in 2024, re-investment into the Jasmine and
Ban Yen fields to continue their long history of reserves replacement, and on
selective step-out opportunities where we see the potential to more fully
utilise the fields' extensive infrastructure to commercialise new
accumulations. As of the end of 2021, the assets held 24.1 million bbls of
estimated 2P oil reserves, representing approximately a four-fold increase
over our pre-existing corporate reserves.

Moreover, we see the new assets and the workforce as an excellent fit with our
highest priorities. In particular, the team's demonstrated history in safe
operations with a strong environmental performance is well aligned with our
sustainability goals and we are delighted to welcome the approximately 180
like-minded individuals to the Valeura team. Just as we've routinely done with
producing assets under our care, we intend to pursue opportunities to extend
the value and economic life of these fields, whilst remaining mindful of our
longer-term responsibility to ensure their eventual decommissioning is planned
and appropriately funded. This line of thinking has been incorporated into all
aspects of our commercial evaluation of this transaction.

We look forward to starting this exciting chapter in our Company's history,
further expanding into a region of the world we know well and charging into
2023 as a transformed company with substantial cash generation capacity and a
clear path to further grow our potential value."

Acquisition

The Acquisition is structured as a corporate acquisition whereby the SPV will
purchase all of the shares of Busrakham, a company established in 2021 to hold
the Thailand assets being sold by the Seller, under the terms of a Sale and
Purchase Agreement ("SPA"). Upon completion of the Acquisition, the SPV will
become the operator and the owner of working interests in the three offshore
licences being acquired, as well as all related production infrastructure and
onshore support facilities including supply bases, offices, and warehouses.

Under the SPA, the Acquisition has an initial headline purchase price of
US$10.4 million and entails Valeura assuming the current work programme and
future abandonment liabilities. The Acquisition is subject to customary
closing conditions and will require the lodging of a Valeura parent company
guarantee, in place of the Seller's guarantee with the Thailand regulator.
Valeura will pay the Seller a deposit of US$6 million and anticipates closing
the Acquisition in Q1 2023. As of the Effective Date, Busrakham had
approximately a nil working capital balance.

Further contingent consideration under the SPA will become due to the Seller
under certain upside benchmark oil price scenarios in 2022, 2023, or 2024.
Such contingent consideration is capped at a maximum of US$50 million.

Funding

Given Valeura's cash position at the end of Q3 2022 of US$23.1 million, the
modest headline consideration price, the impact of ongoing cash flows from the
assets and the expected closing date, Valeura is able to fund the Acquisition
without an equity raise. Accordingly, the Acquisition is expected to be
non-dilutive to current shareholders of Valeura.

Upon closing of the Acquisition, a drawdown of up to US$50 million is
advanceable to the SPV from Trafigura Pte. Ltd., which is in addition to the
initial potential maximum capacity of discrete drawdowns of up to US$30
million, under the facility announced on November 11, 2022 (the "Facility").
Such additional drawdown is subject to the satisfaction of certain conditions
precedent. While the assets acquired through the Acquisition are anticipated
to be strongly cash generative, the Facility provides additional financial
liquidity.

Human Capital

As part of the Acquisition, the Seller's organisation in Thailand and support
infrastructure including supply bases, warehouses and offices will join
Valeura. This includes substantially all of the Seller's Thailand-based staff,
comprised of approximately 180 individuals.

The team is specifically tailored to the continuing opportunity set presented
by the assets, with a strong emphasis on technical expertise in the areas of
subsurface, drilling, production, engineering, and supporting departments. As
such, the organisation will continue to function as a largely autonomous
business unit, under Valeura's direction.

Several leaders within the organisation have worked with the assets throughout
their life cycle, starting with the fields' original discovery and
development. Valeura intends to retain this depth of experience within the
Company and to ensure key in-country relationships are maintained throughout
the integration process and thereafter.

Licence G11/48 (Nong Yao oil field)

The SPV will acquire operatorship and a 90% working interest in Licence
G11/48, which contains the partially developed Nong Yao oil field. The 10%
partner in the block is Palang Sophon Limited who is also Valeura's partner in
its G10/48 Licence, acquired earlier this year. The Nong Yao oil field is
located in the central portion of the Pattani basin of the Gulf of Thailand,
approximately 160 km offshore and in 75 metres water depth. The Nong Yao oil
field contains 12.4 million bbls of 2P oil reserves, on a net working interest
acquired basis, as of December 31, 2021, based on the Company's internal
(non-independent) management estimate. By the end of 2021, the Nong Yao oil
field had produced over 20 million bbls of oil and every year the expected
ultimate recovery (combination of actual production and expected reserves) of
oil from the field has increased with the identification and development of
additional accumulations. Management's reserves estimate is substantially
higher than the original 2P reserves as represented in the field's development
plan, prior to production start-up in 2015 (2.7 million bbls on a net 90%
basis), reflecting that the original estimated reserves have been replaced
many times over through ongoing activity.

Current production at the Nong Yao field is approximately 8,100 bbls/d, net to
the 90% working interest, and is forecast to increase in 2024 through further
development activity.

The Nong Yao oil field has been thus far developed from two interconnected
fixed platforms, including 37 wells and a processing facility. Processed oil
is stored in a leased Floating Storage and Offloading ("FSO") vessel on
location, and is offloaded to shuttle tankers for international sale.
Operating costs for the Nong Yao field are approximately US$12/bbl at
predicted near-term rates. Nong Yao production is light, sweet crude oil which
typically receives prices approximately on par with the Brent crude oil
benchmark.

Licence G11/48 is based on Thailand's Thai III fiscal terms which entail a
sliding scale royalty from 5% to 15% on gross production (approximately 8% at
current rates), a Special Remuneration Benefit ("SRB") on net windfall profits
ranging from 0% to 75% (approximately 20% under current circumstances), and
petroleum income tax of 50% on net profits.

Further development activities are currently underway on Licence G11/48, in
support of commercialising a south-eastern area of the field known as the Nong
Yao extension. The project seeks to add a new Mobile Offshore Production Unit
("MOPU") which will be connected by pipeline to the existing infrastructure
and to drill an additional 12 development wells. Construction of the new MOPU
is in the under way, with the MOPU expected to mobilise to the Nong Yao oil
field in Q4 2023, with commissioning and drilling activity scheduled to take
place immediately thereafter. Valeura forecasts peak production from the field
in 2024 at a rate of approximately 11,000 bbls/d, net to the 90% working
interest.

With the Nong Yao extension facilities in place, Valeura intends to pursue a
work programme aimed at identifying further opportunities on the south-eastern
area of the field and beyond, with the objective of replicating the history of
reserves renewal characteristic of Pattani basin fields. In particular, the
Company aims to add incremental reserves and production to offset natural
declines such that the field's economic life extends beyond the currently
calculated limit of end 2028 and toward the ultimate licence expiry of 2036.

The Company believes the southern portion of Licence G11/48 may contain
potential upside opportunities including a string of prospective small oil
accumulations in the Nong Nuch area identified on 3D seismic. Valeura intends
to conduct further study on these opportunities, including assessing the
potential for incremental volumes through additional near-field exploration or
a cluster development scenario.

Licence B5/27 (Jasmine and Ban Yen oil fields)

The SPV will acquire operatorship and a 100% interest in Licence B5/27, which
contains the developed Jasmine and Ban Yen oil fields. The Jasmine and Ban Yen
oil fields are located in the northern portion of the Pattani basin of the
Gulf of Thailand, approximately 180 km offshore and in 60 metres of water.
Together, the Jasmine and Ban Yen fields contain 9.9 million bbls of 2P oil
reserves on a net working interest acquired basis as of December 31, 2021,
based on management's internal (non-independent) estimate. The estimated
ultimate recovery for the Jasmine and Ban Yen fields (defined as cumulative
production to date plus reserves) has grown steadily throughout the fields'
life, and by the end of 2021 the fields had produced over 85 million bbls of
oil.

Current production at the Jasmine and Ban Yen oil fields is approximately
10,100 bbls/d and the Company anticipates mitigating natural production
decline through infill drilling and further development opportunities, thereby
further increasing the estimated ultimate recovery.

The Jasmine and Ban Yen oil fields have been developed through a total of six
fixed topside facilities and a leased Floating Production Storage and
Offloading vessel ("FPSO"), the Jasmine Venture MV7. The facilities include
well slots for 132 wells, of which 110 slots are utilised by producer wells
and 22 slots by injection and disposal wells. Processed oil is stored at the
FPSO, and is offloaded to shuttle tankers for sale into the domestic Thai
market. Given the fixed nature of facilities associated with Licence B5/27,
operating costs are relatively stable at approximately US$30/bbl at current
production rates. Production from the Jasmine and Ban Yen fields is light,
sweet crude oil, which typically receives a discount of approximately US$2/bbl
below the Brent crude oil benchmark.

Licence B5/27 is based on Thailand's Thai I fiscal terms which entail a flat
12.5% royalty in addition to a petroleum income tax rate of 50% on net
profits. Licence B5/27 is also encumbered by certain private legacy commercial
arrangements approximately equivalent to an additional royalty of 4.5%.

The Jasmine and Ban Yen fields are mid-life oil producing assets which present
opportunities to access additional reserves and hence to bring new volumes
through fixed facilities, thereby mitigating overall field decline rates and
potentially extending field life. A programme of ongoing infill development
drilling is underway on Licence B5/27 which has included nine wells drilled to
date in 2022 plus approximately 19 further wells planned over the 2023 - 2026
time frame. Valeura intends to continue this work programme with the aim of
adding additional reserves and production to offset natural declines such that
the fields' target production rate remains broadly stable while its economic
life extends beyond the currently calculated limit of end 2027 and toward the
ultimate licence expiry of 2032.

Valeura has identified several opportunities for further development of the
licence, including potential oil accumulations within reach of the existing
wellhead infrastructure and the potential for additional exploration within
the licence area. These prospects require further commercial and technical
evaluation, however, the projects appear to be representative of the type of
opportunity which has historically resulted in repeated extensions of the
asset's economic life.

Licence G1/48 (Manora oil field)

The SPV will acquire operatorship and a 70% working interest in Licence G1/48,
which contains the developed Manora oil field. The 30% partner is Tap Oil. The
Manora oil field is located in the Kra sub-basin, a north-west extension of
the Pattani basin in the Gulf of Thailand, approximately 84 km offshore and in
45 metres water depth. The Manora field contains 1.7 million bbls of 2P oil
reserves on a net working interest acquired basis, as of the December 31,
2021, based on management's internal (non-independent) reserves assessment.

Current production at the Manora oil field is approximately 3,000 bbls/d, net
to the 70% working interest.

The Manora oil field has been developed by a single fixed wellhead and
processing platform and a leased FSO vessel on location. The platform includes
30 well slots, of which 15 are utilised by production wells and seven by
injection and disposal wells. Processed oil is stored in the FSO and is
offloaded to shuttle tankers for international sale. Operating costs for the
Manora oil field are approximately US$25/bbl at current rates. Manora
production is medium-weight, sweet crude which typically receives a price
approximately on par with the Brent crude oil benchmark.

Licence G1/48 is based on Thailand's Thai III fiscal terms which entails a
sliding scale royalty from 5% to 15% (approximately 8% at current rates), a
SRB on net windfall profits ranging from 0% to 75% (approximately 8% under
current circumstances), and petroleum income tax of 50% on net profits.

The Manora field is a mature asset for which a decommissioning plan has been
prepared and submitted to Thailand's upstream regulator. While that plan
contemplated an end to the field's economic life in 2022, recent activity has
materially changed the Company's outlook for the field. In particular, two
infill development wells drilled in Q4 2022 have encountered oil and planning
is currently underway to bring these wells online which the Company
anticipates will be additive to production rates. The Company anticipates that
information from these wells will be incorporated into a future reserves
evaluation, effective December 31, 2022.

In addition, the Company intends to apply learnings from these wells toward
its future planning for the field, as part of an aim to extend the field's
economic limit beyond its currently calculated limit of early 2025, and
further toward the licence's final expiry in 2033.

Reserves

Reserves estimates disclosed in this announcement are based on an internal
evaluation (non-independent) conducted by Valeura with an effective date of
December 31, 2021.

Reserves estimates are based on year-end 2021 information, and as such they do
not include the impact of recent adjustments to work programmes, including the
positive effect of additional wells, not previously contemplated for 2022, or
include the production to date in 2022.  With successful ongoing drilling
operations on all fields, the Company is optimistic that future reserves
evaluations will continue to illustrate the notion of reserves renewal and an
increase in the expected ultimate oil recovery. This is underscored by the
fact that the most recent monthly production from the fields of 21,255 bbls/d
is a less than 10% reduction from the published oil production rates from
these fields in 2021.

Valeura intends to commission Netherland, Sewell & Associates, Inc. to
conduct a reserves and contingent resources evaluation for all of its Thailand
assets effective December 31, 2022, in accordance with the Canadian Oil and
Gas Evaluation Handbook, with results to be published by the Company in due
course in the first quarter of 2023 subject to closing of the Acquisition.

Sustainability

Valeura's management believes the most efficient way to ensure a sustainable
ongoing supply of liquid hydrocarbons is through more fully exploiting
discovered or partly developed accumulations. Valeura's investment strategy is
to continually strive to more fully utilise existing infrastructure to add
incremental oil volumes as efficiently as possible from both a value and an
environmental standpoint.

At the same time, Valeura has prioritised minimising greenhouse gas ("GHG")
emissions and responsibly managing waste disposal across all its operations.
All assets to be acquired are equipped with water disposal wells and do not
undertake any overboard discharge of produced water. Once the Acquisition has
closed, Valeura intends to gather baseline data on GHG and other emissions,
fuel consumption, and waste generated, in order to establish a continuous
improvement programme on each of these metrics. The Company intends to begin
reporting on these data, in due course, to enhance the transparency of its
efforts. The Company will also examine ways to further conserve the small
levels of solution gas production, including as an offshore fuel source as
currently implemented at the Manora field.

Valeura believes sustainable operations must also focus on supporting its
human capital. The Company has a history of utilising a predominantly local
workforce wherever it operates and the current organisation will continue to
be comprised of approximately 95% local Thai staff. Valeura intends to
continue this approach with the team joining Valeura, by providing exposure to
international standards, leading-edge support resources, and training across
the business.

Decommissioning

The geology of the Gulf of Thailand, with multiple stacked sandstone
reservoirs, lends itself to a continual programme of reserves replacement
through ongoing infill drilling aimed at more fully commercialising discovered
oil accumulations at each of the fields and maximising the use of fixed
infrastructure. This has been successfully applied year after year with these
assets. Particularly the Nong Yao and Jasmine fields are typical examples,
wherein the expected ultimate oil recovery in both fields reflects a more than
10-fold increase over the initial field development plan. Additionally, while
the forward plan of the fields consistently indicate that production decline
is imminent, the current production of the acquired indicates a very stable
profile. The Company sees the potential to continue this trend in the
near-term and intends to pursue opportunities to economically extend
field-life. This is central to its Gulf of Thailand strategy.

Valeura recognises its obligation to plan and fund the ultimate
decommissioning of the assets being acquired and has included estimates in all
of its economic evaluations. Total decommissioning costs have been currently
estimated by the operator, using internal and/or external engineering
estimates, to be an aggregate net outlay of approximately US$214 million on an
undiscounted basis. Under Thailand's regulations, of the three licences in the
Acquisition, to date, only Licence G1/48 (Manora) has reached a reserves
recovery level that required a decommissioning plan to be submitted, and
approximately one third of the estimated decommissioning obligation has
already been guaranteed with the Thailand regulator. Anticipated future
decommissioning spending for all assets will be recorded as a long-term
liability on the Company's balance sheet.

With the increase in decommissioning activity in the Gulf of Thailand, the
Company has been monitoring the recent public successes by other independent
operators in the Gulf of Thailand and recognises that collaborating with
industry peers may yield efficiencies in decommissioning practices. Through
the advent of such approaches as rigless well abandonments, wellhead platform
and equipment reuse, and potential equipment sharing within the region,
Valeura intends to explore how best to satisfy its decommissioning obligations
while reducing GHG and other emissions and reducing the total expenditure
required. Accordingly, the Company believes there is scope to reduce the
long-term financial liability associated with decommissioning, alongside its
aforementioned approach to pursuing economic life extension projects on all
assets.

Financial Synergy

Valeura anticipates future operating and economic synergies by consolidating
the assets being acquired with its existing business, particularly the assets
acquired with its initial Thailand acquisition, as announced on April 28,
2022.  The Company intends to explore opportunities for cost optimisation
through shared logistics and corporate services, as well as potential savings
throughout its supply chain as a result of the economies of scale built
through combining portfolios.

Outlook

Valeura anticipates closing the Acquisition in Q1 2023 subject to the
satisfaction and/or waiver of all conditions under the SPA. Thereafter, the
Company intends to provide an operational guidance outlook for 2023. The
Company anticipates integration of the joining Thailand organisation with its
pre-existing Thailand organisation and head office will progress through at
least the first half of 2023.

Conference call

Valeura's management team will host an investor and analyst webcast at 09:00
Calgary (16:00 London, 23:00 Bangkok) today, Tuesday December 6, 2022 to
discuss the Acquisition. The live audio and video feed can be accessed via the
link below. Questions may be submitted in writing through the webcast system
or by email to IR@valeuraenergy.com (mailto:IR@valeuraenergy.com) .

Webcast link:
https://teams.microsoft.com/l/meetup-join/19%3ameeting_MzhhZTlkMWEtOTgyNi00MDhiLTg0MzMtNDNhMGNkYjE0MzE2%40thread.v2/0?context=%7B%22Tid%22%3A%22a196a1a0-4579-4a0c-b3a3-855f4db8f64b%22%2C%22Oid%22%3A%22241f769c-12ae-4efc-8c14-d2e523040a83%22%2C%22IsBroadcastMeeting%22%3Atrue%2C%22role%22%3A%22a%22%7D&btype=a&role=a
(https://teams.microsoft.com/l/meetup-join/19%3ameeting_MzhhZTlkMWEtOTgyNi00MDhiLTg0MzMtNDNhMGNkYjE0MzE2%40thread.v2/0?context=%7B%22Tid%22%3A%22a196a1a0-4579-4a0c-b3a3-855f4db8f64b%22%2C%22Oid%22%3A%22241f769c-12ae-4efc-8c14-d2e523040a83%22%2C%22IsBroadcastMeeting%22%3Atrue%2C%22role%22%3A%22a%22%7D&btype=a&role=a)

An audio only feed of the event is available by phone using the Conference ID
and dial-in numbers below and the related presentation will be made available
on the Company's website at
https://www.valeuraenergy.com/investor-information/presentations/.

Conference ID: 472 086 595#

Dial-in numbers:

Canada: (833) 845-9589

Singapore: +65 6450 6302

Thailand: +66 2 026 9035

Turkey: 00800142034779

UK: 0800 640 3933

USA: (833) 846-5630

 

For further information, please contact:

Valeura Energy Inc. (General Corporate
Enquiries)
+1 403 237 7102

Sean Guest, President and CEO

Heather Campbell, CFO
Contact@valeuraenergy.com (mailto:Contact@valeuraenergy.com)

Valeura Energy Inc. (Capital Markets / Investor
Enquiries)                       +1 403 975 6752

Robin James Martin, Investor Relations Manager
                       +44 7392 940495

IR@valeuraenergy.com (mailto:IR@valeuraenergy.com)

 

Auctus Advisors LLP (Corporate Broker to
Valeura)                                 +44
(0) 7711 627 449

Jonathan Wright

Valeura@auctusadvisors.co.uk (mailto:Valeura@auctusadvisors.co.uk)

CAMARCO (Public Relations, Media Adviser to Valeura)
       +44 (0) 20 3757 4980

Owen Roberts, Billy Clegg
Valeura@camarco.co.uk (mailto:Valeura@camarco.co.uk)

 

Oil and Gas Advisories

Reserves disclosed in this announcement are based on an internal evaluation
(non-independent) conducted by Valeura with an effective date of December 31,
2021. The reserves estimates disclosed in this announcement are estimates only
and there is no guarantee that the estimated reserves will be recovered.

Reserves

Reserves are estimated remaining quantities of commercially recoverable oil,
natural gas, and related substances anticipated to be recoverable from known
accumulations, as of a given date, based on the analysis of drilling,
geological, geophysical, and engineering data, the use of established
technology, and specified economic conditions, which are generally accepted as
being reasonable. Reserves are further categorised according to the level of
certainty associated with the estimates and may be sub-classified based on
development and production status.

Proved reserves are those reserves that can be estimated with a high degree of
certainty to be recoverable. It is likely that the actual remaining quantities
recovered will exceed the estimated proved reserves.

Probable reserves are those additional reserves that are less certain to be
recovered than proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the estimated
proved plus probable reserves.

Advisory and Caution Regarding Forward-Looking Information

Certain information included in this announcement constitutes forward-looking
information under applicable securities legislation. Such forward-looking
information is for the purpose of explaining management's current expectations
and plans relating to the future. Readers are cautioned that reliance on such
information may not be appropriate for other purposes, such as making
investment decisions. Forward-looking information typically contains
statements with words such as "anticipate", "believe", "expect", "plan",
"intend", "estimate", "propose", "project", "target" or similar words
suggesting future outcomes or statements regarding an outlook. Forward-looking
information in this announcement includes, but is not limited to: the total
cash consideration; the timing and quantum for any contingent consideration;
the expected addition of 21,200 bbls/d of oil production from the Acquisition;
the expected cash operating costs across the assets; the anticipated monthly
pre-tax cash flows of approximately US$30 million per month from the assets
being acquired; the expected uses of the anticipated cash flows; the ability
to mitigate natural production declines on the acquired assets and extend
field-life; the ability to realise near-term growth through further field
development projects; the ability to identify and execute field life extension
opportunities including through reserves replacement; the satisfaction of the
conditions precedent to closing the Acquisition; closing of the Acquisition in
Q1 2023; the anticipated working capital of Busrakham; the funding of the
Acquisition; the expansion of the scope and capacity of the agreements with
Trafigura Pte. Ltd.;  the timing for the Nong Yao extension project including
mobilisation of the MOPU to the field, drilling activity, and commissioning
including the belief that there is scope to reduce the long-term financial
liability associated with decommissioning; timing to achieve peak production
from the Nong Yao field, and rates of approximately 11,000 bbls/d, net;
anticipated end of field life for all assets being acquired; the Thailand
fiscal regime; the ability minimise GHG emissions and responsibly manage waste
disposal across operation; the ability to achieve operating and economic
synergies between the assets being acquired and the existing portfolio; the
opportunities for cost optimisation through shared logistics and corporate
services; statements with respect to commission an NSAI evaluation of the
reserves and resources associated with the Company's Thailand assets and that
the optimism that future reserves evaluations will continue to illustrate the
notion of reserves renewal and an increase in the expected ultimate oil
recover; statements with respect to employing the Seller's Thailand workforce;
the Company's objectives with respect to sustainability; and all statements
regarding the Company's forward guidance expectations for 2023. In addition,
statements related to "reserves" are deemed to be forward-looking information
as they involve the implied assessment, based on certain estimates and
assumptions, that the reserves can be profitably produced in the future.

Forward-looking information is based on management's current expectations and
assumptions regarding, among other things: the ability to close the
Acquisition and to fund it from cash on hand and future cash flow; the
continuation of operations following the COVID-19 pandemic; political
stability of the areas in which the Company is operating and completing
transactions; continued safety of operations and ability to proceed in a
timely manner; continued operations of and approvals forthcoming from
governments and regulators in a manner consistent with past conduct; future
drilling activity on the required/expected timelines; the prospectivity of the
Company's lands; the continued favourable pricing and operating netbacks
across its business; future production rates and associated operating netbacks
and cash flow; decline rates; the ability to satisfy the conditions precedent
under the Facility; future sources of funding; future economic conditions;
future currency exchange rates; the ability to meet drilling deadlines and
other requirements under licences and leases; and the Company's continued
ability to obtain and retain qualified staff and equipment in a timely and
cost efficient manner. In addition, the Company's work programmes and budgets
are in part based upon expected agreement among joint venture partners and
associated exploration, development and marketing plans and anticipated costs
and sales prices, which are subject to change based on, among other things,
the actual results of drilling and related activity, availability of drilling,
offshore storage and offloading facilities and other specialised oilfield
equipment and service providers, changes in partners' plans and unexpected
delays and changes in market conditions. Although the Company believes the
expectations and assumptions reflected in such forward-looking information are
reasonable, they may prove to be incorrect.

Forward-looking information involves significant known and unknown risks and
uncertainties. Exploration, appraisal, and development of oil and natural gas
reserves are speculative activities and involve a degree of risk. A number of
factors could cause actual results to differ materially from those anticipated
by the Company including, but not limited to: the ability of management to
execute its business plan or realise anticipated benefits from the
Acquisition; the risks of further disruptions from the COVID-19 pandemic;
competition for specialised equipment and human resources; disruption in
supply chains; the risks of currency fluctuations; changes in oil and gas
prices and netbacks; potential changes in joint venture partner strategies and
participation in work programmes; uncertainty regarding the contemplated
timelines and costs for work programme execution; the risks of disruption to
operations and access to worksites; potential changes in laws and regulations,
the uncertainty regarding government and other approvals; counterparty risk;
the risk that the conditions precedent under the Facility will not be
satisfied and that other financing may not be available;  risks associated
with weather delays and natural disasters; and the risk associated with
international activity. The forward-looking information included in this new
release is expressly qualified in its entirety by this cautionary statement.
See the most recent AIF and MD&A for a detailed discussion of the risk
factors.

The forward-looking information contained in this new release is made as of
the date hereof and the Company undertakes no obligation to update publicly or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, unless required by applicable
securities laws. The forward-looking information contained in this new release
is expressly qualified by this cautionary statement.

Additional information relating to Valeura is also available on SEDAR at
www.sedar.com
(https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00014898)
.

This announcement does not constitute an offer to sell or the solicitation of
an offer to buy securities in any jurisdiction, including where such offer
would be unlawful. This announcement is not for distribution or release,
directly or indirectly, in or into the United States, Ireland, the Republic of
South Africa or Japan or any other jurisdiction in which its publication or
distribution would be unlawful.

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this news release.

 

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