RCS - Valeura Energy Inc. - Q2 2024 Operations and Financial Update
10/07/2024 08:15
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RNS Number : 8307V Valeura Energy Inc. 10 July 2024
Q2 2024 Operations and Financial Update
Singapore, July 10, 2024: 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.
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South Africa or Japan or any other jurisdiction in which its publication or
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