REG - Valeura Energy Inc. - TRADING UPDATE

Valeura EnergyAnnouncement

20/01/2022 07:05

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RNS Number : 0234Z  Valeura Energy Inc.  20 January 2022

VALEURA ENERGY

TRADING UPDATE

Calgary, January 20, 2022: Valeura Energy Inc. (TSX:VLE, LSE:VLU) (the
"Company" or "Valeura"), an upstream oil and gas company with deep tight gas
assets in the Thrace Basin of Turkey, is pleased to provide a trading
update.

Financial Position and Royalty

As of December 31, 2021, Valeura had no debt and held cash and cash equivalent
resources totalling US$40.8 million, before accounting for anticipated
receivables relating to Q4 2021.  Upon selling its shallow gas producing
business in Turkey in May 2021, Valeura retained a royalty on ongoing
production to capture potential price upside for the benefit of shareholders.
 The Company has been notified by the buyer that it will receive a total of
US$780,000 in royalty payments for Q4 2021.  Further, Valeura expects that it
will ultimately receive total royalty payments of US$2.5 million under this
arrangement, representing the maximum possible royalty payment under its
contractual arrangements with the buyer, and that based on current gas prices
and estimated production, the remainder of this amount should be fully
recovered by the end of 2022.

During 2021, Valeura reshaped its organisation structure and downsized to best
support its forward strategy, resulting in a significant reduction in
corporate costs.  In Q4 2021, the combined effect of reduced ongoing
corporate costs together with anticipated royalty payments resulted in net
cash consumption of just over US$400,000 for that quarter.

Strategy

Valeura's 20 Tcfe unrisked mean prospective resource deep tight gas appraisal
play in Turkey remains a core part of the Company's portfolio and represents a
significant source of potential long term value.  Given the continued
historically high gas prices in Europe and Turkey, Valeura has resumed its
search for a suitable farm-in partner for the tight gas appraisal play and has
re-engaged a London-based advisor to assist in the search.  The Company
believes securing a partner is the most prudent first step before committing
significant capital to the next phase of appraisal drilling.  Valeura is
poised to resume deep drilling operations rapidly upon securing a partner,
with several locations in the advanced permitting stage.

As a result of the ongoing COVID-19 situation in Turkey, local regulators have
extended both the current phase of exploration licences and the timeline to
fulfil licence commitments, including drilling obligations, by one year.  The
current phase of the Company's exploration licences will now expire on June
27, 2023, after which the Company has the option to apply for two additional
two-year exploration periods.  In particular, this extension provides
additional flexibility with respect to Valeura's obligations to drill two
Banarli exploration wells and one West Thrace exploration well to maintain its
deep gas rights, meaning the Company will have no material capital commitments
until mid 2023.

In the nearer-term, Valeura intends to leverage its strong financial position
toward growing by way of mergers and acquisitions ("M&A").  The
collective international experience of the Company's management and board
defines a broad focus area, including jurisdictions with significant deal flow
and expected relatively low competition for assets.  Valeura is actively
pursuing several M&A opportunities, targeting near-term production and
cash flow, plus follow-on investment opportunities to enable mid-term
growth.  The Company is currently in discussions on several opportunities,
and will disclose further details on these transactions in due course as
appropriate.

 

 

For further information please contact:

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

Sean Guest, President and CEO

Heather Campbell, CFO

Robin Martin, Investor Relations Manager

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

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

Jonathan Wright

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

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

Owen Roberts, Billy Clegg, Monique Perks, Hugo Liddy

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

 

Resources

Resource disclosure in this announcement is based on an independent resources
evaluation as at December 31, 2018 conducted by DeGolyer and MacNaughton in
its report dated March 13, 2019, which was 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 ang Gas
Activities, as adjusted to reflect Equinor's withdrawal in Q1 2020.
Prospective resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective resources have both an
associated chance of discovery and a chance of development. The unrisked
estimates of prospective resources referred to in this announcement have not
been risked for either the chance of discovery or the chance of development.
There is no certainty that any portion of the prospective resources will be
discovered. If a discovery is made, there is no certainty that it will be
developed or, if it is developed, there is no certainty as to the timing of
such development or that it will be commercially viable to produce any portion
of the prospective resources. Additional resources information is included in
the Company's annual information form for the year ended December 31, 2018.

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
Company's expectations regarding the anticipated  amount and timing of
royalty payments in respect of Q4 2021 and by the end of 2022; the Company's
anticipated amount of net cash consumption in Q4 2021; statements with respect
to the Company's deep tight gas play strategy, including management's belief
that the play represents a material value proposition for shareholders, its
ability to find another farm-in partner for the play, and its ability to
resume appraisal drilling rapidly upon securing a partner; and statements with
respect to the Company's inorganic growth strategy, including its ability to
leverage its strong financial position and identify M&A targets. In
addition, statements related to "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.

Forward-looking information is based on management's current expectations and
assumptions regarding, among other things: stability of gas prices and
production from the shallow assets used to determine the amount of the royalty
payments; approvals forthcoming from the Turkish government in a manner
consistent with past conduct; future drilling activity on the
required/expected timelines; the prospectivity of the Company's lands,
including the deep potential; future economic conditions; future currency
exchange rates; the ability to meet drilling deadlines and other requirements
under licences and leases; the ability to attract a new partner in the deep
play; the ability to identify attractive merger and acquisition opportunities
to support growth; and the Company's continued ability to obtain and retain
qualified staff and equipment in a timely and cost efficient manner.. 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: reduction in gas prices or
production from the shallow assets that impacts the amount of the royalty
payments; inability to secure a new partner for the deep play and execute
potential M&A transactions; inability to meet drilling deadlines to hold
licences; the risks of further disruptions from the COVID-19 pandemic; the
risks of currency fluctuations; uncertainty regarding the contemplated
timelines and costs for the deep evaluation; potential changes in laws and
regulations, the uncertainty regarding government and other approvals;
counterparty risk or payment risk for the royalty; and the risk associated
with international activity. The forward-looking information included in this
news release is expressly qualified in its entirety by this cautionary
statement. See the AIF for a detailed discussion of the risk factors.

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.

Additional information relating to Valeura is also available on SEDAR at
www.sedar.com (http://www.sedar.com) .

This Announcement contains inside information as defined in EU Regulation No.
596/2014, part of UK law by virtue of the European Union (Withdrawal) Act
2018, and is in accordance with the Company's obligations under Article 17 of
that Regulation.

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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