Valeura Energy Inc.: Q2 2024 Operations and Financial Update

SINGAPORE, July 10, 2024 (Korea Bizwire) – Valeura Energy Inc. (TSX:VLE, OTCQX:VLERF) (“Valeura” or the “Company”) is pleased to provide an update on Q2 2024 operations. 

Highlights for Q2 2024

• Oil production averaged 21.1 mbbls/d⁽¹⁾;
• Drilling success across the portfolio, including exploration success at Nong Yao D, production wells at Nong Yao A, and the start of development drilling at Nong Yao C;
• Price realisations of US$87.7/bbl, a record US$2.7/bbl premium over Brent;
• Revenue of US$164 million; and
• No debt, and cash of US$145 million, after having paid an aggregate US$109 million in taxes, purchase of the Nong Yao Floating Storage and Offloading (“FSO”) vessel, and final contingent consideration associated with the asset acquisition from KrisEnergy (Asia) Ltd.

^{(1) Working interest share production, before royalties.}

Sean Guest, President and CEO commented:

“I am pleased to share that production was robust throughout the quarter and in line with our expectations, averaging 21.1 mbbls/d.  Demonstrating our agility, we have remained nimble with our drilling programme, and took the opportunity to drill both exploration and infill wells at Nong Yao, before starting our extensive development programme on Nong Yao C, which is now well underway and progressing on track for first oil later in Q3 2024.

Our financial performance has been strong.  We recorded gross revenue of US$164 million during the quarter on the back of 1.9 million bbls of liftings, and improved oil prices.  During the quarter, we had cash outlays related to scheduled tax payments and several one-off payments amounting to US$109 million in total, but still concluded the period with a solid cash position of US$145 million and no debt.  We believe this performance highlights the highly cash-generative nature of our business and the resilience of our balance sheet.

On June 27, 2024, we announced a precautionary suspension of production at our Wassana field to ensure a safe situation while we investigate a potential risk to the production facility’s structural integrity. While the temporary deferral of production at Wassana is an unfortunate setback in an operational sense, and results in our current production being in the 17.0 mbbls/d range (Valeura working interest share before royalty over the past 10 days), safety remains our top priority in such matters, and we are progressing swiftly to fully understand the situation, implement potential remedies, and restart production as soon as possible.    

I am also pleased to announce that we have started FEED study work on the greater Wassana redevelopment project to include new discovered resources and the existing production area.  We anticipate taking a final investment decision on this project at approximately the end of 2024.  Growth projects like greater Wassana, alongside a potential pipeline of merger and acquisition-led opportunities we see in the region continue to form the backbone of our growth-oriented strategy.”

Q2 2024 Update

Oil production averaged 21.1 mbbls/d during Q2 2024 (Valeura’s working interest share, before royalties), a decrease of 4% from the prior quarter.  Q2 2024 average production rates were affected by natural declines, in line with the Company’s expectations, while most drilling activity was focused on either exploration or development wells which will come online in Q3 2024.

Oil sales totalled 1.9 million bbls during Q2 2024, above Q1 2024.  At the end of the quarter, the Company held crude oil inventory of 0.9 million bbls which was approximately the same as the inventory at the start of the quarter. 

Oil revenue during Q2 2024 was US$164.0 million up 10% from Q1 2024 due to higher liftings coupled with a higher realised price. 

Price realisations averaged US$87.7/bbl during Q2 2024, a US$2.7/bbl premium over the Brent crude oil benchmark.  Premiums have increased due to deliberate actions on the Company’s part to find more lucrative local markets for its heavier crudes, in particular. 

The Company paid taxes of US$83.4 million during the quarter, relating primarily to the full year 2023 in respect of its Jasmine field, and 2H 2023 in relation to its other fields, and include payment for a US$11.4 million tax obligation which was recently identified, relating to the 2018/2019 time frame, while the assets were under their previous ownership.  In addition, during Q2 2024 the Company completed its US$19 million acquisition of the Nong Yao FSO, and paid the final US$7.0 million contingent consideration relating to its asset acquisition from KrisEnergy (Asia) Ltd.  The Company’s cash position at June 30, 2024 was US$145.1 million, which includes US$17.3 million held as restricted cash.  Valeura has no debt.

Operations Update

Nong Yao C Update

Valeura’s drilling operations during Q2 2024 were focused on the Nong Yao field (90% operated working interest), where the Company achieved drilling success across the portfolio.  Activity included an exploration discovery in the Nong Yao D area and two production infill wells at Nong Yao A, prior to the start of development drilling on the Nong Yao C accumulation.

Through the Nong Yao C development project, the Company is targeting an increase in production output from the greater Nong Yao area from approximately 7,000 bbls/d to a total of 11,000 bbls/d (Valeura working interest share before royalties).  Drilling operations are proceeding as planned, with the Company having substantially drilled approximately half of the planned drilling targets.  First oil from the Nong Yao C development is planned for Q3 2024. 

We believe achievements at the Nong Yao asset illustrate Valeura’s multi-faceted strategy to add value through growth.  The Company anticipates that this asset will be the largest source of production growth in 2024, and the largest single source of production in the portfolio.  Valeura further expects that when evaluated at year-end 2024, recoverable volumes from the asset are likely to have increased as a result of both exploration, new field development and infill drilling activity in 2024.  From a value perspective, the Company is forecasting a decrease in unit operating costs, and further upside in the medium term through the potential for successful appraisal of additional step-out targets.

Wassana MOPU Update

Production at the Wassana field (100% operated interest) was steady throughout Q2 2024, including contributions from the new infills drilled earlier in the year.  On June 28, 2024, the Company implemented a precautionary suspension of production (at the time, approximately 5,000 bbls/d, before royalties) after a scheduled underwater inspection of the mobile offshore production unit (“MOPU”) identified a crack within a weld on one of MOPU’s three steel legs.

Subsequent review of the findings, including input from an experienced third-party engineering firm, has suggested that the crack may be superficial and therefore may not indicate a risk to the structural integrity of the MOPU. Valeura is preparing to conduct a more advanced underwater inspection work which is scheduled to be completed around the end of July 2024. If this inspection demonstrates that the crack is superficial, then the Company intends to restart production without delay.  If it is demonstrated to propagate further into the structure, then more extensive repairs would be required prior to restarting production.

Wassana Redevelopment Update

Following the Company’s 2023 appraisal drilling programme, which confirmed the presence of oil deeper than previously demonstrated in the Wassana field, Valeura has assessed the potential for a redevelopment of the field, to yield an increase in production and extension of the field’s economic life.  

Valeura is pleased to announce that it has awarded a contract for front end engineering and design (“FEED”) work for the redevelopment of the Wassana field to Thai Nippon Steel Engineering & Construction Corporation Ltd., who have already commenced work.  Following the FEED study, Valeura will consider a final investment decision at approximately the end of 2024.

Results Timing

Valeura intends to release its full unaudited financial and operating results for Q2 2024 on August 8, 2024, and will discuss the results in more detail through a management webcast.  In addition, the Company intends to announce revised 2024 guidance estimates once the way forward for the Wassana MOPU has been determined. 

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

Valeura Energy Inc. (Investor Enquiries)                             +1 403 975 6752 / +44 7392 940495
Robin James Martin, Vice President, Communications and Investor Relations
IR@valeuraenergy.com

CAMARCO (Public Relations, Media Adviser to Valeura)  +44 (0) 20 3757 4980
Owen Roberts, Billy Clegg
Valeura@camarco.co.uk

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/.

About Valeura

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.

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 expectation of taking a final investment decision on the Wassana redevelopment project at approximately the end of 2024; the target of increasing production output from the greater Nong Yao area to a total of 11,000 bbls/d; timing for first oil from the Nong Yao C development; Valeura’s expectation that at year-end 2024, recoverable volumes from the Nong Yao asset will have increased as a result of both exploration, new field development and infill drilling activity in 2024; the expectation that Nong Yao will be the largest source of production growth for the Company in 2024; the timing to complete the advanced underwater inspection work at the Wassana MOPU; and the Company’s expectation to update 2024 guidance estimates once the way forward for the Wassana MOPU has been determined.

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 Türkiye; 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.

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 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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Source: Valeura Energy Inc. via GLOBE NEWSWIRE