RCS - Valeura Energy Inc. - Operational Update and 2024 Guidance Outlook

Valeura EnergyAnnouncement

16/01/2024 08:15

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RNS Number : 8290Z  Valeura Energy Inc.  16 January 2024

Operational Update and 2024 Guidance Outlook

Singapore, January 16, 2024: Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF)
("Valeura" or the "Company"), the upstream oil and gas company with assets in
the Gulf of Thailand and the Thrace Basin of Turkey, is pleased to provide an
operational update and its guidance outlook for 2024.

 

Highlights

·    Q4 2023 average oil production of 19,165 bbls/d, resulting in a full
year 2023 average of 20,420 bbls/d, net to Valeura's working interest((1))

·    Net Cash at December 31, 2023 of US$150.9 million((2))

·    Anticipated Capex and Opex performance within or below guidance for
the full year 2023((1)(3))

·    Wassana field returned to production in December 2023 yielding total
average portfolio oil production to date in January 2024 of approximately
22,600 bbls/d, net to Valeura working interest

·    2024 oil production guidance of 21,500 - 24,500 bbls/d, net to
Valeura's working interest

·    2024 Capex guidance of US$135 - 155 million, plus Exploration Expense
of approximately US$8 million

·    2024 Opex guidance of US$205 - $235 million, equating to
approximately US$26/bbl((3)).

 

(1)   Pro-forma basis (full calendar year 2023 performance of the assets),
including amounts relating to the period January 1, 2023 through March 22,
2023, prior to completion of the Company's Gulf of Thailand acquisition from
Mubadala Energy.

(2)   Net Cash: Is a non-IFRS financial measure which does not have a
standardised meaning prescribed by IFRS. This non-IFRS financial measure is
provided because management uses the information to a) analyse financial
strength and b) manage the capital structure of the Company. This non-IFRS
measure is used to ensure capital is managed effectively in order to support
the Company's ongoing operations and needs.  Financial measures disclosed in
this announcement are unaudited.

(3)   Opex and Opex per bbl: Are a Non-IFRS financial measure and non-IFRS
financial ratio, respectively, which do not have standardised meanings
prescribed by IFRS. The most directly comparable financial measure to Opex is
operating expenses. The measure differs from operating expenses by including
the leases that are associated with operations, such as bareboat contracts for
key operating equipment, such as Floating Storage and Offloading vessels
("FSOs"), Floating Production, Storage and Offloading vessels ("FPSOs"),
Mobile Offshore Production Units ("MOPUs"), and warehouses, and adjusting for
non-cash items. Opex is divided by production in the period to arrive at Opex
per bbl.

 

Operational Update

The Company's net working interest oil production averaged 19,165 bbls/d
during Q4 2023, resulting in full year pro-forma net oil production from its
assets of 20,420 bbls/d.  Q4 2023 oil sales totalled 1.987 million bbls;
pro-forma full year oil sales from the assets were 7.321 million bbls.  At
the end of the quarter, production was restarted at the Wassana field, meaning
all four of the Company's fields were in active production at year-end 2023.
With the contribution of production from the Wassana field, the average
production for January 2024 to date has been approximately 22,600 bbls/d.

During Q4 2023, Valeura completed an infill drilling programme on the Jasmine
field, and thereafter an infill drilling programme on the Nong Yao field, both
as previously announced.  Valeura drilled a total of 26 wells throughout
2023, with drilling campaigns on each of its fields.  All campaigns were
successful in adding additional production, and, in all instances, management
anticipates that the results of drilling activity will lead to an extension to
the economic life of the fields through both sustainment of current production
and appraisal successes which give rise to future drilling opportunities.  In
mid-December 2023, the Company mobilised its drilling rig to the Wassana
field, where a production-oriented infill drilling programme of three
horizontal development wells is currently underway.

Valeura significantly strengthened its balance sheet in 2023, building to a
Net Cash position of US$150.9 million((1)) as of December 31, 2023, versus a
Net Cash position of US$5.0 million at December 31, 2022.  During Q4 2023,
the Company repaid the final US$12.9 million of its outstanding debt, meaning
the December 31, 2023 Net Cash balance is comprised entirely of cash and cash
equivalents, including approximately US$17.3 million which is held as
restricted cash.

The Company intends to release its financial and operating results for the
full year 2023 and the three-month period ended December 31, 2023 in mid-March
2024, along with its reserves and resources estimates as of December 31, 2023.
Relative to the Company's revised 2023 guidance as announced on August 9,
2023, the Company expects to announce final Opex at the lower end of the
guidance range, Capex below the range, and reserves and resources estimates
that reflect an extension to economic field lives across the portfolio.

 

2024 Guidance Outlook

Valeura is forecasting average 2024 full year oil production of 21,500 -
24,500 bbls/d, based on the assumption that Nong Yao C development drilling
will start in late Q1 2024 and continue for approximately four months.
Accordingly, the Company anticipates higher production in the second half of
the year 2024.

Consistent with past oil sales from its assets, Valeura is forecasting price
realisations approximately equivalent to the Brent crude oil benchmark.

Valeura has planned total Capex in 2024 of US$135 - 155 million, in addition
to approximately US$8 million in planned exploration drilling (Exploration
Expense).

Opex guidance in 2024 is US$205 - 235 million, which equates to approximately
US$26/bbl.  This includes the additional costs to lease and operate the new
Nong Yao C production facility. Across its portfolio, the Company has
initiated a programme to pursue greater operating efficiencies, while
maintaining its high standards for safety and operational excellence.  This
includes a broad array of endeavours focused on capturing synergies between
the businesses it integrated in 2023 and enhancing legacy facilities to
improve both cost and emissions intensity.

 Category             2024 Guidance
 Production           21,500 - 24,500 bbls/d
 Price realisations   Approximately equivalent to the Brent crude oil benchmark
 Opex                 US$205 - 235 million
 Capex                US$135 - 155 million
 Exploration Expense  Approximately US$8 million

The Company intends to fund its 2024 spending through cash on hand and cash
flow generated from ongoing operations.  All guidance estimates provided
above reflect Valeura's net working interest share, relating to the full year
2024.  Valeura intends to maintain a strong balance sheet, in support of its
growth-oriented strategy, which includes the potential for further mergers and
acquisitions.

Approximately 75% of the Company's Capex is directed toward drilling.
Valeura intends to have one drilling rig under contract for the entire year,
and to conduct a continuous drilling programme covering each of its fields.
The drilling sequence itself is subject to ongoing real-time optimisation.

Approximately US$47 million in Capex, net to Valeura's 90% working interest,
is planned for growth of the Nong Yao field, through development of the Nong
Yao C accumulation.  In February 2024, the Company anticipates transporting a
Mobile Offshore Production Unit ("MOPU") to the Nong Yao field, where it will
be connected by pipeline to the existing Nong Yao field infrastructure and
will serve as the wellhead production platform for the Nong Yao C field
extension.  As soon as practical after installation and commissioning,
Valeura intends to begin drilling a programme of nine development wells (six
producers, three water injectors), and will simultaneously perform
debottlenecking works on the existing facilities to accommodate the new
production.  First production from the Nong Yao C extension is expected in
June 2024, and when fully on stream in the months thereafter, the Company is
targeting peak production rates from the greater Nong Yao field totalling
approximately 11,000 bbls/d, net to Valeura's working interest.

The 100% Valeura-owned Wassana field is also a key growth asset for the
Company.  Valeura has begun a production-oriented drilling campaign that is
targeting reservoir intervals which have been only partially developed. The
current drilling campaign of three horizontal development wells is intended to
increase production to a target rate of approximately 4,500 bbls/d, and the
Company may drill additional development wells later in the year.

In addition, following the success of its 2023 Wassana appraisal drilling
programme, where results indicated a possible additional 20 production well
locations, the Company is evaluating options to expand the field's production
infrastructure, with a view to making a final investment decision in 2024.
Valeura's objective is to pursue a redevelopment of the field such that
further accumulations can be commercialised, thereby increasing production and
extending the field's economic life beyond 2030.

At Valeura's 100%-owned Jasmine field, the Company is planning 2024 Capex of
approximately US$50 million. The bulk of Jasmine's Capex will be directed
toward an infill drilling campaign planned for the second half of 2024.
Further Jasmine infill wells are a direct follow-on from opportunities
identified in its 2023 and earlier drilling campaigns.  The Company's efforts
at Jasmine are oriented toward reducing the effect of natural declines and
continuing the field's long history of year-on-year reserves additions.

At the same time, the Company has sanctioned a project to improve both the
cost base and greenhouse gas ("GHG") emissions intensity of its operations at
Jasmine.  As part of the US$50 million Capex planned for Jasmine, Valeura
will invest approximately US$8 million to install a gas turbine generator
tailor-made to utilise the field's unique waste gas stream as feedstock for
power generation.  The project is forecast to reduce the Jasmine field's GHG
emissions and diesel consumption, and thus Opex.  The reduction in Opex is
expected to contribute to a further extension of the economic life of the
field.

Further detail on Valeura's commitment to the sustainability of its business
will be provided in the Company's inaugural Sustainability Report, which is in
preparation now.

While Valeura's focus remains primarily on investment opportunities that
generate immediate or near-term cash flow, the Company intends to invest
approximately US$8 million in pursuing exploration opportunities within its
licences. Current exploration opportunities have been identified at Wassana
North, Nong Yao D, and the Ratree Prospect, located near the Jasmine field.
 Final drilling sequencing and timing will be determined through ongoing work
to optimise the drilling programme around the Company's development drilling
plans.  Additional exploration prospects within the Company's asset portfolio
are being evaluated as part of its normal course of business.

The Company is continuing to seek a partner to participate in its tight gas
exploration/appraisal play in Turkey and does not intend to commit material
spending to the play until such time as a suitable commercial arrangement is
in place.

 

Sean Guest, President and CEO of Valeura commented:

"I am pleased to present our high-level outcomes for 2023 and guidance outlook
for 2024.  By delivering average oil production of 20,400 bbls/d, strong
operating margins, and managing spending to within or below our guidance
range, we are in a very strong financial position.  At year-end 2023, we had
no debt, US$150 million in cash, and a suite of growth projects in our sights
to deliver further value for our stakeholders.

With all fields online, we are seeing a strong start to the new year and have
recorded 2024 production to date of 22,600 bbl/d.   That start energises our
view that 2024 will be a year to both demonstrate the resilience of our legacy
assets and also to showcase the growth potential of our business.  Our key
organic projects for the year are the development of the Nong Yao C
accumulation, which will start with an aggressive drilling campaign later this
quarter and further development of the Wassana field - initially through
infill drilling, and thereafter through finalising plans for a large-scale
re-development of the field.

We are guiding to average 2024 oil production of between 21,500 and 24,500
bbls/d and planning a Capex programme of US$135 - 155 million plus an US$8
million exploration programme.  Our total Opex guidance is US$205 - 235
million, which equates to approximately US$26/bbl.  While this is a reduction
in our unit operating costs from 2023, we will continue to focus on driving
even further efficiency into our business, and have embarked on a programme to
capture these opportunities across the portfolio.  That includes innovative
projects like our bespoke gas turbine installation planned for Jasmine, which
not only improves the asset's GHG emissions profile, but pays out quickly
through Opex reductions.

Across the portfolio, we remain mindful of our obligations to ensure the
ongoing sustainability of our business and look forward to articulating our
priorities in more detail with an inaugural sustainability report this year.
We firmly believe that a world-class operating performance is directly linked
to value delivery, and supports our ability to generate cash for the benefit
of all stakeholders.

At current spot and forward curve oil prices we foresee surplus cash
generation which we intend to retain so as to build even greater balance sheet
strength.  As inorganic growth remains a core part of our strategy, and we
see compelling opportunities on the horizon, our priority is to not only
provide for the ongoing funding needs of the business, but also to maximise
our ability to transact.  On all fronts, we remain steadfast in our
commitment to deliver value for stakeholders through growth."

 

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
Enquiries)                             +1 403 975
6752 / +44 7392 940495
Robin James Martin, Vice President, Communications and Investor Relations
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)

 

About the Company

Valeura Energy Inc. is a Canada-based public company engaged in the
exploration, development and production of petroleum and natural gas in
Thailand and in Turkey.  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/) .

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: Capex and
Opex performance for 2023 being within or slightly below guidance; anticipated
2024 oil production rates; anticipated total Capex in 2024, anticipated 2024
Opex; management's anticipation that the results of drilling activity will
result in an extension of the economic life of its fields, including both
shoring up current production and appraisal successes giving rise to future
drilling opportunities; the Company's intended timing to release its financial
and operating results for the full year 2023 and the three-month period ended
December 31, 2023, along with its reserves and resources estimates as of
December 31, 2023; the Company expects to announce reserves and resources
estimates that reflect an extension of the economic lives of the fields;
anticipated full year oil production from the Nong Yao C field; anticipated
timing for the start of drilling on Nong Yao C, the duration of drilling
operations, and anticipated higher production in the second half of the year;
forecasted price realisations being approximately equivalent to the Brent
crude oil benchmark; the Company's intention to fund its 2024 spending through
cash on hand and cash flow generated from ongoing operations; Valeura's
intention to maintain an increasingly strong balance sheet; the Company's
intention to have a drilling rig under contract for all of 2024, and to
conduct a continuous drilling programme on each of its fields; the Company's
expectation to use approximately US$47 million of its 2024 Capex for the
growth of the Nong Yao C Field; timing to sail a MOPU to the Nong Yao C field
and its subsequent connection by pipeline to the infrastructure; anticipated
timing for the commencement of a nine development well drilling programme and
debottlenecking on the Nong Yao C field; timing for first production from the
Nong Yao C extension and peak rates; the increase in production from the
Wassana field to a target rate of approximately 4,500 bbls/d; the potential
drilling of additional development wells on the Wassana field; timing to make
a final investment decision on the Wassana field re-development and the
ability to increase production and extend the field's economic life beyond
2030; the Company's anticipated Capex spend at the Jasmine field; timing for
the 2024 Jasmine field infill drilling campaign; the forecast reduction in the
Jasmine field's greenhouse gas emissions, reduced diesel consumption,
reduction in Opex, and time to project payback associated with the Jasmine gas
turbine project; the Company's plan to invest approximately US$8 million to
pursuing exploration opportunities within its licences; final drilling
sequencing and timing being determined in order to optimise the drilling
programme around the Company's development drilling plans; and the Company
being able to generate surplus cash at current spot and forward curve oil
prices.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; 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; royalty rates and taxes; 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; ability to
attract a partner to participate in its tight gas exploration/appraisal play
in Turkey; future growth; the sufficiency of budgeted capital expenditures in
carrying out planned activities; the impact of increasing competition; the
ability to efficiently integrate assets and employees acquired through
acquisitions; global energy policies going forward; 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; 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 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
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.

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.

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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