Valeura Energy Inc. Announces Operational Update and 2024 Guidance Outlook
Operational Update and 2024 Guidance Outlook
SINGAPORE, SINGAPORE / ACCESSWIRE / 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
Valeura Energy Inc. (Investor Enquiries) +1 403 975 6752 / +44 7392 940495
Robin James Martin, Vice President, Communications and Investor Relations
IR@valeuraenergy.com
Auctus Advisors LLP (Corporate Broker to Valeura) +44 (0) 7711 627 449
Jonathan Wright
Valeura@auctusadvisors.co.uk
CAMARCO (Public Relations, Media Adviser to Valeura) +44 (0) 20 3757 4980
Owen Roberts, Billy Clegg
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.
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.
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SOURCE: Valeura Energy Inc.
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