Valeura Energy (TSE VLE): Waiting for a formal guidance for 2023
• With the acquisition of the Mubadala assets having been completed only recently, Valeura has not provided any guidance for YE22 reserves, FY23 production and capex guidance nor working capital on completion. This is now expected to be provided in the coming weeks as Valeura management engages fully with the team joining from Mubadala.• Through the first week of operations following completion of the acquisition from Mubadala Energy, oil production has averaged approximately 21,500 bbl/d (net to Valeura’s interest), very close to the October 2022 reported at the time the deal was agreed in December. The fields are performing very well.
• During start-up preparations at Wassana, the MT Jaka Tarub oil storage vessel impacted the field’s Catenary Anchor Leg Mooring buoy, resulting in damage to certain offloading components. There was no discharge of fluids and no personnel were injured.
• Valeura is now assessing the impact of the incident. Once the underwater inspections are finished over the next 1-2 weeks, the company will be able to provide further visibility on a new start date.
• Until then and Pending further details on (1) the working capital at completion of the Mubadala assets acquisitions, (2) the FY23 production guidance and (3) the YE22 reserves estimates at the new assets, the only change we have made to our forecast is a month delay at Wassana. This has no impact on our valuation and we re-iterate our target price of C$5.20 per share.
• The shares continue to offer deep value, production and cashflow growth and reserves upside.
Financials
At YE22, Valeura held US$17.5 mm in cash (US$6.4 mm net cash). YE22 tax losses were US$437 mm, up from US$69 mm at YE21 with the bulk of the difference associated with Thailand. The corporate restructuring is expected to take 6-9 months and the tax losses from Wassana will be applied to some of the Mubadala assets from then. Even if there are minor delays to reaching first oil at Wassana, there would be no material impact on the balance sheet given the cash resources and cashflow coming following the acquisition of the Mubadala Energy assets that closed over a week ago. Excluding Wassana, we are forecasting 21.1 mbbl/d production in 2Q23.
Valuation unchanged
Our Core NAV for the company based on its 2P reserves continues to be ~C$4.80/sh. Including Rossukon, this increases to ~C$5.15/sh. Our net cash forecast at YE23 continues to be ~US$235 mm at a Brent price of US$91/bbl (versus market cap of ~US$200 mm) increasing to >US$450 mm (Brent price of US$92/bbl) at YE24. At US$80/bbl for Brent, YE23 net cash would be US$175 mm increasing to US$335 mm at YE24.
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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