Valeura Energy (TSX: VLE): 245% Reserves Replacement Ratio. 2C Resources ~x2.5. Decommissioning down by 35%
• YE24 2P reserves were estimated at 50 mmbbl (up from 38 mmbbl at YE23). This represents a Reserves Replacement Ratio of 245%, significantly above our expectations of ~100%.• The reserves revision reflects (1) upward revision of STOIIP estimates (the high achieved recovery factors suggest that the volumes initially in place had been underestimated), (ii), positive drilling results which reflect Valeura's application of advanced drilling and completion technologies including geosteering and inflow control and (iii) better well performance with lower decline rates than initially estimated. Nong Yao C is performing particularly well.
• The most significant reserves increases were for Jasmine (+6.8 mmbbl or +68%) and Nong Yao (+5.7 mmbbl or +51%). The expected end of field lives have been extended by 3-5 years.
• The PV for the decommissioning liabilities has been reduced by ~35% (to ~US$90 mm) since YE23 and ~50% since 1Q23. This reflects the benchmarking of costs to current decommissioning activities in Thailand.
• The auditor’s NPV10 for the YE24 2P reserves plus the YE24 net cash is >US$1 bn (C$13.6 per share).
• As we incorporate the new reserves and now assume production of 20-25 mbbl/d through to about 2030 (previously forecasted at around 20 mbbl/d in 2027 and 16.5 mbbl/d in 2028), we have increased our target price from C$11 per share to C$13 per share.
Contingent resources
The YE24 2C contingent resources are estimated at 48.4 mmbbl including ~25 mmbbl classified as “development unclarified” which we view as very likely to be commercial. Of these, 10.6 mmbbl are associated with Wassana, a significant portion of which is expected to be converted into 2P reserves upon taking the FID for the field's redevelopment in 1Q25.
Valuation
We have extended our production plateau forecast for each asset to recover the new reserves estimates. We have also incorporated the updated decommissioning cost estimates. As a result, we have increased our Core NAV from C$8.66/sh to C$10.41/sh. Our ReNAV now reflects the new contingent resources estimates and the Ratree prospect. Consequently, we have increased our ReNAV from C$10.92/sh to C$12.83/sh. Excluding the re-development capital expenditure for Wassana, we forecast that Valeura will hold ~US$370 mm in net cash at YE25, which is over 65% of the current market cap. Additional production from Wassana is expected to boost our production profile starting in 2027.
Valeura Energy is engaged in the exploration, development and production of petroleum and natural gas in Turkey and Western Canada. As of Dec 31 2010, proven gross reserves for light and medium oil was 116 thousand barrels (net reserves of 104 thousand barrels); proven gross reserves for heavy oil was 10 thousand barrels (net reserves of 9 thousand barrels); proven gross reserves for natural gas was 1,047 million cubic feet (net reserves of 938 million cubic feet); and proven gross reserves for natural gas liquids was 26 thousand barrels (net reserves of 19 thousand barrels).
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.