RCS - Valeura Energy Inc. - Final Investment Decision on Wassana Redevelopment

Valeura EnergyAnnouncement

14/05/2025 08:15

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RNS Number : 6103I  Valeura Energy Inc.  14 May 2025

Final Investment Decision on Wassana Field Redevelopment

 

Singapore, May 14, 2025: Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) ("Valeura"
or the "Company") has taken final investment decision ("FID") on redevelopment
of the Wassana field, in Licence G10/48 (100% Valeura interest), offshore Gulf
of Thailand, which is expected to create significant value for shareholders.
 The Company is pleased to provide details of the redevelopment project,
updated reserves and resources estimates and values, and a revision to its
2025 guidance.

 

Highlights

·      Optimum Redevelopment Design: Redevelopment of the Wassana field
through a new-build central processing platform ("CPP") to optimise full block
potential;

·      Production Growth: First oil expected in Q2 2027, with peak field
production of 10,000 bbls/d - more than 2.7 times current output from the
field;

·      Significant Reserves Increase: Wassana proved plus probable (2P)
reserves increased to 20.5 million bbls, representing an increment of
approximately 18 million bbls compared to the continuing production with
existing infrastructure only((1));

·      Field Life Extension: Extends the end-of-field life ("EOFL") to
2043, an increase of 16 years;

·      Efficient and Fully Funded Capital Allocation: US$120 million
estimated investment in facilities over the next two years, with US$40 million
in 2025, and the remainder in 2026, fully funded from the Company's balance
sheet;

·      Highly accretive: Wassana 2P net present value (NPV(10)) before
tax increases to US$218 million (vs. US$127 million pre-FID)((2)), equating to
a net asset value ("NAV")((3)) addition of C$1.23 per share; and

·      Strong and Resilient Economics: An estimated 40% internal rate of
return ("IRR") at US$60/bbl Brent oil prices, and upside at higher price
points, with a payback of 18 months.

(1)   Management estimate of reserves recoverable in a no-further-action
case, with assumed decommissioning of the Mobile Offshore Production Unit
("MOPU") at the end of 2027.

(2)   NSAI 2024 Report, as more fully described in the Company's February
13, 2025 press release.

(3)   Incremental 2P NPV(10) after tax, using US$/C$ exchange rate of 1.435,
and 106.65 million common shares outstanding, as at December 31, 2024.

 

Dr. Sean Guest, President and CEO commented:

 

"Our final investment decision to pursue the Wassana redevelopment project is
a milestone for Valeura. Since assuming operatorship, we have identified
substantially more reserves than were initially estimated at the Wassana
field. Beyond the significant increase in reserves and extension of field
life, this project is expected to significantly increase production from the
field to 10,000 bbls/d in the second half of 2027, at anticipated unit
Adjusted Opex reflecting a reduction of approximately 2/3(rds) versus current
rates.

 

Additionally, this development concept is creating opportunities for further
growth through a 'hub and spoke' model whereby we can potentially tie-in the
satellite oil accumulations already discovered both north and south of the
main Wassana field. This approach has been highly successful in both our
Jasmine and Nong Yao fields.

 

This project is very robust and resilient from an economic standpoint.  Even
in a lower oil price environment of US$60 per barrel, the development delivers
returns of approximately 40% IRR.  This economic strength provides downside
protection while maintaining upside potential as oil prices strengthen,
creating a favourable risk-reward profile for our shareholders.

 

Our financial position allows us to fully fund this development through
existing cash reserves, without compromising our balance sheet strength.  The
project's solid economics across various price scenarios demonstrates our
disciplined approach to capital allocation and our commitment to creating
sustainable value for our shareholders.

 

I am very pleased that Valeura has grown into a business that has the capacity
to take on this magnitude of project. At the same time, we continue to uphold
our principle of generating healthy cash flow which provides the financial
wherewithal to continue our ambition to add further value through growth."

 

Wassana Field Redevelopment

 

Current production from the Wassana field is via a MOPU facility that is
constrained by an end-of-life expected at end 2027.  Given this limited life,
it is only possible to recover approximately 2.5 mmbbls of oil with the
current production facility.  The facility is also limited in the number of
future development wells that could be drilled and has insufficient oil and
fluid processing capacity to recover the expected reserves and resources of
oil in the G10/48 licence.  Further, the MOPU's age and processing system
also carry the highest unit Adjusted Opex of all Valeura's Gulf of Thailand
assets.

 

The Company has reviewed a number of different redevelopment concepts for the
Wassana field and has selected a new CPP with 24 production well slots as the
optimal development concept to yield both the highest financial returns and
the maximum total recoverable oil from the G10/48 licence.  The new CPP will
replace the existing MOPU production infrastructure and is expected to allow
for a more holistic commercialisation of the field's oil reserves, both by
enabling more aerially extensive drilling reach and also by way of a longer
facility design life, resulting in more years of cash flow generation.  Given
the increased reserves and contingent resource identified in the G10/48
licence, the new facility is required to have a production life well into the
2040s.  The CPP, which mirrors the specifications of the Company's Nong Yao A
facility, has been designed to also accommodate future growth opportunities
through the eventual tie-in of additional oil accumulations both to the north
and to the south of the Wassana field.

 

The Company has selected Thai Nippon Steel Engineering & Construction
Corporation Ltd ("Thai Nippon Steel") for Engineering, Procurement,
Construction, and Commissioning ("EPCC") of the facility.  Thai Nippon Steel
is a very capable EPCC contractor with four decades experience in developing
facilities of this type in Thailand.

The contracting strategy selected by the Company ensures that more than 80% of
the US$120 million facility capex is under fixed price commitments, with key
long-lead items secured.

 

Capital Investment & Development Timeline

 

Total capex for the CPP and all of the export pipelines and facilities is
estimated at US$120 million, of which approximately US$40 million is planned
to be spent in 2025 with the remainder in 2026.  The current plan is for the
CPP to be fully installed and ready to commence development drilling at
approximately the end of 2026.  The initial drilling campaign comprises 16
horizontal development wells and one water injection well.  Based on rig
rates that the Company contracted in 2024, the estimated cost of each
development well is approximately US$4.8 million.  However, Valeura has
observed a downward trend in jack-up drilling rig rates and materials in
recent months, and therefore anticipates that drilling capex for the Wassana
redevelopment may be lower if this trend continues.  First oil from the new
facility is planned for Q2 2027.

 

Production Profile & Operating Efficiencies

 

Once the initial development wells are completed, management estimates that
the Wassana field will produce oil at rates of 10,000 bbls/d in the second
half of 2027.  The target plateau rate for the CPP is then above 7,500 bbls/d
after the existing MOPU is decommissioned in late 2027.  Once the CPP is
operational, Valeura estimates that its operating characteristics will be
approximately consistent with the performance of the Nong Yao A facility,
which bears Adjusted Opex per bbl (a non-IFRS measure, more fully described in
the Company's May 14, 2025 Management's Discussion and Analysis) in the range
of US$12 - 16/bbl.  This is anticipated to reduce the Company's overall
Adjusted Opex per bbl, thereby making the development value accretive and the
portfolio more resilient.

 

Expansion Potential & Economic Resilience

 

The updated EOFL for the Wassana field is 2043 (see below) and the CPP will be
constructed to include two risers to allow for satellite field tiebacks.
 Accumulations of oil have already been identified to the north of Wassana at
the Nirami field, which may form the basis for one satellite development, and
the Company is reprocessing 3D seismic south of the Wassana field in the
vicinity of the Mayura oil discovery to support further appraisal drilling in
this area. Development of these satellites would extend both the plateau
production from the CPP and also the ultimate field life.  The CPP concept
facilitates the development of satellite fields with minimal wellhead platform
infrastructure, resulting in the potential for cost-efficient tieback
operations; the Company envisages such incremental production bearing even
lower Adjusted Opex than the cost of the production tied directly to the CPP.

 

Valeura has thoroughly evaluated the economics of the CPP redevelopment
project, and believes the project presents a compelling investment
proposition.  All of the Company's investments are scrutinised based on oil
price sensitivities, and in this instance, even at Brent crude oil benchmark
prices of US$60/bbl, management estimates that Wassana will generate an IRR in
excess of 40% and a payback of 18 months, underscoring the resilience and
strong economics of the redevelopment.

 

Wassana Reserves and Resources Update

 

Valeura has commissioned Netherland, Sewell & Associates, Inc. ("NSAI") to
assess the reserves and contingent resources for its Wassana field in light of
the decision to pursue the Wassana redevelopment.  For clarity, NSAI's
evaluation only addresses the G10/48 licence, the Company's other assets were
not re-evaluated.  NSAI's evaluation is presented in a report dated May 14,
2025 (the "NSAI Wassana FID Report") and is based on an effective date of
December 31, 2024 so as to be consistent with previous NSAI evaluations of the
Company's reserves and resources.

 

The NSAI Wassana FID Report includes those oil accumulations on the Wassana
field that have already been encountered and derisked through the Company's
drilling programme in 2023, in addition to known accumulations which are being
accessed through the existing Wassana infrastructure.  All reserves on the
G10/48 licence are deemed to be heavy oil reserves.

 

 Wassana Heavy Oil Reserves                     Gross (Before Royalties) Reserves, Working Interest Share

                                                 (mbbls)
 Proved                Producing Developed      1,851
                       Non-Producing Developed  198
                       Undeveloped              13,364
 Total Proved (1P)                              15,413
 Total Probable (P2)                            5,136
 Total Proved + Probable (2P)                   20,549
 Total Possible (P3)                            2,148
 Total Proved + Probable + Possible (3P)        22,697

 

Valeura notes that NSAI's previous assessment of Wassana reserves, the NSAI
2024 Report, as more fully described in the Company's February 13, 2025 press
release, was based on the most conservative redevelopment concept that
delivered relatively low reserves.  With FID of the CPP-based redevelopment
concept, NSAI is now able to use the planned CPP facility, increased number of
wells, and their associated production profiles and cost to estimate the
reserves indicated above, which in all instances, are higher than those in the
NSAI 2024 Report.

 

Net present values of future net revenue from oil reserves are based on
forecast Brent crude oil reference prices of US$75.58, US$78.51, US$79.89,
US$81.82, and US$83.46 per bbl for the years ending December 31, 2025, 2026,
2027, 2028, and 2029, respectively, with 2% escalation thereafter. NSAI
assumes cost inflation of 2% per annum.  Price realisation forecasts are
based on the Brent crude oil reference prices above, and adjusted for oil
quality, and market differentials.

 

The estimated 2P NPV(10) after income taxes from the Wassana field is US$218.2
million.

 

 Wassana Future Net Revenue                     Before Tax NPV(10)  After Tax NPV(10)

                                                (US$ million)       (US$ million)
 Proved                Producing Developed      (30.0)              (30.0)
                       Non-Producing Developed  13.7                13.7
                       Undeveloped              273.5               200.9
 Total Proved (1P)                              257.2               184.6
 Total Probable (P2)                            97.3                33.7
 Total Proved + Probable (2P)                   354.5               218.2
 Total Possible (P3)                            97.5                48.3
 Total Proved + Probable + Possible (3P)        452.0               266.5

 

The NSAI 2024 Report indicated a 2P NPV(10) of US$126.6 million after income
taxes, which implies that the redevelopment project adds US$91.6 million in
incremental value.  Expressed in Canadian dollars (using an US$/C$ exchange
rate of 1.435), the incremental 2P NPV(10) is C$131.4 million after income
taxes, which, on a per share basis equates to a value add of C$1.23/share.
 These estimates are based on the same assumptions set out in the Company's
February 13, 2025 press release, which assumed a US$/C$ exchange rate of 1.435
and 106.65 million common shares outstanding, as at December 31, 2024.  As a
result, the Company estimates a current NAV of C$14.84/share, based on the sum
of the 2P NPV(10) and the Company's cash as of December 31, 2024, which was
US$259.4 million.

 

With this update, the Company's 2P reserves as of year-end 2024 are increased
to 57.6 mmbbls which yields a reserve life index ("RLI") of 6.5 years.  The
Wassana field illustrates the potential for Gulf of Thailand fields to
continue adding reserves and extending economic field life.  The Company has
increased its reserves life every year since assuming operatorship.

 

                                                Gross (Before Royalties) Reserves, Working Interest Share (mbbls)
 Reserves by Field                              Jasmine (Light/ Medium)((1))  Manora (Light/ Medium)((1))  Nong Yao (Light/ Medium)((1))  Wassana (Heavy)((2))  Total
 Proved                Producing Developed      5,268                         1,370                        6,541                          1,851                 15,030
                       Non-Producing Developed  703                           433                          153                            198                   1,487
                       Undeveloped              4,713                         705                          3,742                          13,364                22,524
 Total Proved (1P)                              10,684                        2,509                        10,436                         15,413                39,042
 Total Probable (P2)                            6,108                         848                          6,500                          5,136                 18,592
 Total Proved + Probable (2P)                   16,792                        3,357                        16,936                         20,549                57,634
 Total Possible (P3)                            3,647                         718                          4,297                          2,148                 10,810
 Total Proved + Probable + Possible (3P)        20,440                        4,075                        21,233                         22,697                68,445

 

(1) NSAI 2024 Report

(2) NSAI Wassana FID Report

 

NSAI also assessed contingent resources for the G10/48 licence. Best estimate
(2C) contingent resources are reduced from 12.7 mmbbls to 6.2 mmbbls on an
unrisked basis.  This reduction is largely due to a significant portion of
the contingent resource moving into reserves with the approval of the new
project. The majority of the remaining contingent resources are associated
with the Nirami Field to the north with some also associated with the Mayura
discovery to the south.

 

 Contingent Resources  NSAI Wassana FID Report
                       Urisked (mmbbls)  Risked (mmbbls)
 Low Estimate (1C)     6.5               3.6
 Best Estimate (2C)    6.2               2.6
 High Estimate (3C)    9.3               3.4

 

 

Guidance Update

 

In light of anticipated 2025 spending of US$40 million on the Wassana
redevelopment project, the Company's guidance for Adjusted Capex (a non-IFRS
measure, more fully described in the Company's Management's Discussion and
Analysis dated May 14, 2025) has been revised to US$165 - 185 million for the
full year 2025.  The Company is also providing guidance on Free Cash Flow (a
non-IFRS measure, being Adjusted Cash Flow from Operations less Adjusted
Capex, both as more fully described in the Company's Management's Discussion
and Analysis dated May 14, 2025).  Under Valeura's Updated 2025 Guidance, and
based on benchmark Brent oil prices ranging from US$65 - 85/bbl, Free Cashflow
Guidance is US$80 - 195 million.

 

The Company's guidance assumptions for average production, Adjusted Opex (a
non-IFRS measure, more fully described in the Company's Management's
Discussion and Analysis dated May 14, 2025), and Exploration expense are
re-affirmed.  In addition to spending on the Wassana redevelopment project in
2025, the Company's Updated 2025 Guidance is based on the unchanged assumption
of having one drilling rig on contract for the full year and conducting
certain brownfield developments as previously disclosed.  Adjusted Opex
includes the cost of leasing certain vessels as part of its ongoing
operations, including the Nong Yao C MOPU, the Jasmine field's Floating
Production Storage and Offloading vessel, as well as Floating Storage and
Offloading vessels at the Manora and Wassana fields, and a warehouse.  Such
leases are expected to total approximately US$33 million, unchanged from the
Original 2025 Guidance.

 

                                    Original 2025                Updated 2025

                                    Guidance                     Guidance
 Average Daily Oil Production((1))  23.0 - 25.5 mbbls/d          23.0 - 25.5 mbbls/d
 Adjusted Opex                      US$215 - 245 million         US$215 - 245 million
 Adjusted Capex                     US$125 - 150 million         US$165 - 185 million
 Exploration expense                Approximately US$11 million  Approximately US$11 million
 Free Cash Flow                     US$112 - 227 million((2))    US$80 - 195 million

 

(1)   Working interest share production, before royalties.

(2)   Illustrative Free Cash Fow guidance based on the Company's Original
2025 Guidance assumptions.

 

Also unchanged is the Company's intention to fund its 2025 guidance spending
through cash on hand plus cash flow generated from ongoing operations.   The
Company continues to expect that these sources will continue to strengthen the
Company's balance sheet, concurrent with the Wassana redevelopment, thereby
providing capacity for other growth projects, including inorganic
opportunities.

 

 

Webcast

 

Valeura intends to comment on the Wassana redevelopment project as part of a
management update presentation and Q&A session following its Annual
General Meeting of Shareholders which is scheduled for today, May 14, 2025, at
4:00 P.M. in Calgary.  Shareholders may attend in person, as further detailed
in the Management's Information Circular which was mailed to shareholders and
is available on the Company's website and on www.sedarplus.ca
(http://www.sedarplus.ca) .  A webcast of the live event is available with
the link below.  Shareholders who are unable to attend in person may submit
written questions through the webcast system or by email to
IR@valeuraenergy.com (mailto:IR@valeuraenergy.com) .

 

Participants are advised to register for the online event in advance, using
the following link:
https://events.teams.microsoft.com/event/f0e30b40-c6bc-4673-bd84-b57491e1ba58@a196a1a0-4579-4a0c-b3a3-855f4db8f64b
(https://events.teams.microsoft.com/event/f0e30b40-c6bc-4673-bd84-b57491e1ba58@a196a1a0-4579-4a0c-b3a3-855f4db8f64b)

An audio only feed of the Meeting is available by phone using the Conference
ID and dial-in numbers below:

Conference ID: 239 311 896 799

Dial-in numbers:

Canada: (833) 845-9589,,49176158#

Singapore: +65 6450 6302,,49176158#

Thailand: +66 2 026 9035,,49176158#

Türkiye: 0800 142 034779,,49176158#

United Kingdom: 0800 640 3933,,49176158#

United States: (833) 846-5630,,49176158#

 

 

For further information, please contact:

 

Valeura Energy Inc. (General Corporate
Enquiries)                       +65 6373 6940

Sean Guest, President and CEO

Yacine Ben-Meriem, CFO
Contact@valeuraenergy.com (mailto:Contact@valeuraenergy.com)

 

Valeura Energy Inc. (Investor and Media
Enquiries)                       +1 403 975 6752 / +44
7392 940495

Robin James Martin, Vice President, Communications and Investor Relations
IR@valeuraenergy.com (mailto:IR@valeuraenergy.com)

 

 

Contact details for the Company's advisors, covering research analysts and
joint brokers, including Auctus Advisors LLP, Canaccord Genuity Ltd (UK),
Cormark Securities Inc., Research Capital Corporation, and Stifel Nicolaus
Europe Limited, are listed on the Company's website at
www.valeuraenergy.com/investor-information/analysts/
(http://www.valeuraenergy.com/investor-information/analysts/) .

 

 

About the Company

 

Valeura Energy Inc. is a Canadian public company engaged in the exploration,
development and production of petroleum and natural gas in Thailand and in
Türkiye. The Company is pursuing a growth-oriented strategy and intends to
re-invest into its producing asset portfolio and to deploy resources toward
further organic and inorganic growth in Southeast Asia. Valeura aspires toward
value accretive growth for stakeholders while adhering to high standards of
environmental, social and governance responsibility.

Additional information relating to Valeura is also available on SEDAR+ at
www.sedarplus.ca (http://www.sedarplus.ca) .

Oil and Gas Advisories

 

Reserves and contingent resources disclosed in this news release are based on
an independent evaluation conducted by the incumbent independent petroleum
engineering firm, NSAI with an effective date of December 31, 2024 and a
preparation date of May 14, 2025 post-FID and February 13, 2025 pre-FID. The
NSAI estimates of reserves and resources were prepared using guidelines
outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance
with National Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities. The reserves and contingent resources estimates disclosed in this
news release are estimates only and there is no guarantee that the estimated
reserves and contingent resources will be recovered.

 

This news release contains a number of oil and gas metrics, including "NAV",
"RLI", "EOFL", and "IRR" which do not have standardised meanings or standard
methods of calculation and therefore such measures may not be comparable to
similar measures used by other companies. Such metrics are commonly used in
the oil and gas industry and have been included herein to provide readers with
additional measures to evaluate the Company's performance; however, such
measures are not reliable indicators of the future performance of the Company
and future performance may not compare to the performance in previous periods.

"NAV" is calculated by adding the estimated future net revenues based on a 10%
discount rate to net cash, (which is comprised of cash less debt) as of
December 31, 2024. NAV is expressed on a per share basis by dividing the total
by basic common shares outstanding. NAV per share is not predictive and may
not be reflective of current or future market prices for Valeura.

 

"RLI" is calculated by dividing reserves by management's estimated total
production before royalties for 2025.

 

"EOFL" is calculated by NSAI as the date at which the monthly net revenue
generated by the field is equal to or less than the asset's operating cost.

 

"IRR" is used by management as a measure of the profitability of a potential
investment.  It is calculated as the discount rate that would result in a net
present value of zero.

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.

 

Developed reserves are those reserves that are expected to be recovered from
existing wells and installed facilities or, if facilities have not been
installed, that would involve a low expenditure (e.g., when compared to the
cost of drilling a well) to put the reserves on production.

 

Developed producing reserves are those reserves that are expected to be
recovered from completion intervals open at the time of the estimate. These
reserves may be currently producing or, if shut in, they must have previously
been on production, and the date of resumption of production must be known
with reasonable certainty.

 

Developed non-producing reserves are those reserves that either have not been
on production, or have previously been on production, but are shut in, and the
date of resumption of production is unknown.

 

Undeveloped reserves are those reserves expected to be recovered from known
accumulations where a significant expenditure (e.g., when compared to the cost
of drilling a well) is required to render them capable of production. They
must fully meet the requirements of the reserves classification (proved,
probable, possible) to which they are assigned.

 

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.

 

Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves. It is unlikely that the actual remaining
quantities recovered will exceed the sum of the estimated proved plus probable
plus possible reserves. There is a 10% probability that the quantities
actually recovered will equal or exceed the sum of the estimated proved plus
probable plus possible reserves.

 

The estimated future net revenues disclosed in this news release do not
necessarily represent the fair market value of the reserves associated
therewith.

 

The estimates of reserves and future net revenue for individual properties may
not reflect the same confidence level as estimates of reserves and future net
revenue for all properties, due to the effects of aggregation.

Contingent Resources

Contingent resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations using
established technology or technology under development, but which are not
currently considered to be commercially recoverable due to one or more
contingencies. Contingencies are conditions that must be satisfied for a
portion of contingent resources to be classified as reserves that are: (a)
specific to the project being evaluated; and (b) expected to be resolved
within a reasonable timeframe.

 

Contingent resources are further categorised according to the level of
certainty associated with the estimates and may be sub‐classified based on a
project maturity and/or characterised by their economic status. There are
three classifications of contingent resources: low estimate, best estimate and
high estimate. Best estimate is a classification of estimated resources
described in the Canadian Oil and Gas Evaluation Handbook as the best estimate
of the quantity that will be actually recovered; it is equally likely that the
actual remaining quantities recovered will be greater or less than the best
estimate. If probabilistic methods are used, there should be at least a 50
percent probability that the quantities actually recovered will equal or
exceed the best estimate.

 

The project maturity subclasses include development pending, development on
hold, development unclarified and development not viable. The contingent
resources disclosed in this news release are classified as either development
on hold, development unclarified, or development not viable.

 

Development on hold is defined as a contingent resource where there is a
reasonable chance of development, but there are major non-technical
contingencies to be resolved that are usually beyond the control of the
operator.

 

Development unclarified is defined as a contingent resource that requires
further appraisal to clarify the potential for development and has been
assigned a lower chance of development until commercial considerations can be
clearly defined. Chance of development is the likelihood that an accumulation
will be commercially developed.

 

Conversion of the development unclarified resources referred to in this news
release is dependent upon (1) the expected timetable for development; (2) the
economics of the project; (3) the marketability of the oil and gas production;
(4) the availability of infrastructure and technology; (5) the political,
regulatory, and environmental conditions; (6) the project maturity and
definition; (7) the availability of capital; and, ultimately, (8) the decision
of joint venture partners to undertake development.

 

The major positive factor relevant to the estimate of the contingent
development unclarified resources referred to in this news release is the
successful discovery of resources encountered in appraisal and development
wells within the existing fields. The major negative factors relevant to the
estimate of the contingent development unclarified resources referred to in
this news release are: (1) the outstanding requirement for a definitive
development plan; (2) current economic conditions do not support the resource
development; (3) limited field economic life to develop the resources; and (4)
the outstanding requirement for a final investment decision and commitment of
all joint venture partners.

 

Development not viable is defined as a contingent resource where no further
data acquisition or evaluation is currently planned and hence there is a low
chance of development, there is usually less than a reasonable chance of
economics of development being positive in the foreseeable future. The major
negative factors relevant to the estimate of development not viable referred
to in this news release are: (1) current economic conditions do not support
the resource development; and (2) availability of technical knowledge and
technology within the industry to economically support resource development.

 

If these contingencies are successfully addressed, some portion of these
contingent resources may be reclassified as reserves.

Of the best estimate 2C contingent resources estimated in the NSAI Wassana FID
Report, on a risked basis: 100% of the estimated volumes are heavy oil; less
than 1% are categorised as Development Not Viable, with the remainder
categorised as Development Unclarified. There are no Development On Hold
resources within the 2C category.

 

 Resources Project                                     Heavy Crude Oil                                         Chance of Development (%)

Maturity Subclass
(Development On Hold)
                                                                      Unrisked                    Risked
                                                       Gross (mbbls)  Net (mbbls)  Gross (mbbls)  Net (mbbls)
 Contingent Low Estimate (1C) Development Not Viable   1,715.7        1,617.1      1,544.2        1,455.4      90%
 Contingent Best Estimate (2C) Development Not Viable  0.0            0.0          0.0            0.0          90%
 Contingent High Estimate (3C) Development Not Viable  0.0            0.0          0.0            0.0          90%

 

 Resources Project                                     Heavy Crude Oil                                         Chance of Development (%)

Maturity Subclass
(Development Unclarified)
                                                                      Unrisked                    Risked
                                                       Gross (mbbls)  Net (mbbls)  Gross (mbbls)  Net (mbbls)
 Contingent Low Estimate (1C) Development Not Viable   4,294.9        4,047.9      1,937.8        1,826.4      10-60%
 Contingent Best Estimate (2C) Development Not Viable  6,072.4        5,723.3      2,583.4        2,434.9      10-60%
 Contingent High Estimate (3C) Development Not Viable  9,221.9        8,691.6      3,378.2        3,183.9      10-60%

 

 Resources Project                                     Heavy Crude Oil                                         Chance of Development (%)

Maturity Subclass
(Development Not Viable)
                                                                      Unrisked                    Risked
                                                       Gross (mbbls)  Net (mbbls)  Gross (mbbls)  Net (mbbls)
 Contingent Low Estimate (1C) Development Not Viable   493.2          464.9        74.0           69.7         15%
 Contingent Best Estimate (2C) Development Not Viable  85.8           80.9         12.9           12.1         15%
 Contingent High Estimate (3C) Development Not Viable  58.5           55.1         8.8            8.3          15%

 

The NSAI estimates have been risked, using the chance of development, to
account for the possibility that the contingencies are not successfully
addressed. Due to the early stage of development for the development
unclarified resources, NSAI did not perform an economic analysis of these
resources; as such, the economic status of these resources is undetermined and
there is uncertainty that any portion of the contingent resources disclosed in
this new release will be commercially viable to produce.

 

Glossary

bbl                   barrels of oil

mbbl                thousand barrels of oil

mmbbl             million barrels of oil

 

 

Advisory and Caution Regarding Forward-Looking Information

Certain information included in this news release 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 news release includes, but is not limited
to: the description of the Wassana redevelopment; timing for first oil from
the Wassana redevelopment; anticipated production rates from the Wassana field
and extension of its economic field life; anticipated capital spending and the
timing thereof; sources of funding for the project; anticipated rates of
return; the EPCC contractor for the Wassana redevelopment; the Wassana
redevelopment development timeline; projections for Wassana's future unit
operating costs and Adjusted Opex, and for the cost of production from
potential future satellite developments; the opportunities for further growth
and cash flow generation; anticipated future rates for drilling rig rates (and
trends) and drilling-related materials; and the Company's updated guidance
estimates for 2025.

In addition, statements related to "reserves" and "resources" are deemed to be
forward-looking information as they involve the implied assessment, based on
certain estimates and assumptions, that the resources can be discovered and
profitably produced in the future.

 

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 is based on management's current expectations and
assumptions regarding, among other things: political stability of the areas in
which the Company is operating; 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;
ability to achieve extensions to licences in Thailand and Türkiye to support
attractive development and resource recovery; 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; future sources of funding; future economic conditions; the
impact of inflation of future costs; future currency exchange rates; interest
rates; the ability to meet drilling deadlines and fulfil commitments under
licences and leases; future commodity prices; the impact of the Russian
invasion of Ukraine; the impact of conflicts in the Middle East; royalty rates
and taxes; management's estimate of cumulative tax losses being correct;
future capital and other expenditures; the success obtained in drilling new
wells and working over existing wellbores; the performance of wells and
facilities; the availability of the required capital to funds its exploration,
development and other operations, and the ability of the Company to meet its
commitments and financial obligations; the ability of the Company to secure
adequate processing, transportation, fractionation and storage capacity on
acceptable terms; the capacity and reliability of facilities; the application
of regulatory requirements respecting abandonment and reclamation; the
recoverability of the Company's reserves and contingent resources; future
growth; the sufficiency of budgeted capital expenditures in carrying out
planned activities; the impact of increasing competition; the availability and
identification of mergers and acquisition opportunities; the ability to
successfully negotiate and complete any mergers and acquisition opportunities;
the ability to efficiently integrate assets and employees acquired through
acquisitions; global energy policies going forward; international trade
policies; future debt levels; 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 and resources 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
acquisitions; the risk of disruptions from public health emergencies and/or
pandemics; competition for specialised equipment and human resources; the
Company's ability to manage growth; the Company's ability to manage the costs
related to inflation; disruption in supply chains; the risk of currency
fluctuations; changes in interest rates, oil and gas prices and netbacks; the
risk that the Company's tax advisors' and/or auditors' assessment of the
Company's cumulative tax losses varies significantly from management's
expectations of the same; 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, including international treaties and trade policies; the
uncertainty regarding government and other approvals; counterparty risk; the
risk that financing may not be available; risks associated with weather delays
and natural disasters; and the risk associated with international activity.
See the most recent annual information form and management's discussion and
analysis of the Company for a detailed discussion of the risk factors.

 

Certain forward-looking information in this news release may also constitute
"financial outlook" within the meaning of applicable securities legislation.
Financial outlook involves statements about Valeura's prospective financial
performance or position and is based on and subject to the assumptions and
risk factors described above in respect of forward-looking information
generally as well as any other specific assumptions and risk factors in
relation to such financial outlook noted in this news release. Such
assumptions are based on management's assessment of the relevant information
currently available, and any financial outlook included in this news release
is made as of the date hereof and provided for the purpose of helping readers
understand Valeura's current expectations and plans for the future. Readers
are cautioned that reliance on any financial outlook may not be appropriate
for other purposes or in other circumstances and that the risk factors
described above or other factors may cause actual results to differ materially
from any financial outlook.

 

The forward-looking information contained in this news 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 news
release is expressly qualified by this cautionary statement.

 

 

This news release 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 news release 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.

 

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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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