Valeura Energy (LSE: VLU): Wassana FSO sales away. Accretive acquisition of minorities.
• The MT Jaka Tarub crude oil storage vessel for the Wassana field has sailed away and is now on its way to the Wassana field.• The vessel is expected to arrive at Wassana in the next few days, to be followed by first oil shortly thereafter.
• Valeura is also acquiring the 12.5% minority interest in the Thailand SPV for 9.5 mm shares in Valeura representing 9.4% of the enlarged share capital.
• This is a very accretive transaction that increases production, cashflow and reserves in Thailand by 14.3%.
• It also simplifies the capital structure and the understanding of the cashflow net to Valeura.
• We are increasing our target price from C$4.70 per share to C$5.20 per share to capture the impact of the acquisition of minorities.
• The shares continue to offer deep value, production and cashflow growth and reserves upside.
Increasing our YE23 net cash forecast
Our Core NAV for the company based on its 2P reserves is now ~C$4.80/sh. Including Rossukon, this increases to ~C$5.15/sh. Our net cash forecast at YE23 is now ~US$240 mm for Brent price of US$91/bbl (versus market cap of ~US$170 mm) increasing to >US$450 mm (Brent price of US$92/bbl) at YE24. At US$70/bbl for Brent, YE23 net cash would be US$145 mm increasing to US$275 mm at YE24. The magnitude of future cash generation creates the opportunity for potential shareholder distributions.
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.
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