Valeura Energy (TSX: VLE): 219% reserve replacement ratio in 2023
• YE23 1P and 2P reserves are estimated at 29.9 mmbbl and 37.9 mmbbl respectively. This represents a reserve replacement ratio of 219%.• The reserves addition is much greater than we expected. Valeura has booked 7 mmbbl at Wassana (we expected only 5 mmbbl) and has replaced 112-147% of the 2023 production at each of the other fields.
• While the YE23 Brent prices assumptions for 2024-2026 are now only ~US$78-80/bbl (US$81-82/bbl at YE22 for the same periods), the after tax NPV10 of the 1P reserves is now estimated at US$194 mm. This is well above the YE22 estimate of US$68 mm. Adding ~US$151 mm of net cash would imply that the company value based on its 1P reserves only is US$345 mm, which is greater than Valeura’s market cap.
• The after tax NPV10 of the company’s 2P reserves is US$428.5 mm, well above last year (US$261 mm). Adding the YE23 net cash implies C$7.56 per share for the company.
• These figures do not include the positive impact of the expected tax restructuring of the company to apply the tax losses at Wassana against Manora and Nong Yao profits.
• The YE23 reserves booking showcases the business model of Valeura with the postponing of the decommissioning of Nong Yao, Jasmine and Manora by 1-2 years to 2026-2028. The Thai assets were estimated to hold ~31.7 mmbbl of 2P reserves at YE18 and have produced ~41 mmbbl from 2019 to 2023.
• As we incorporate the new reserves and resources, we have increased our target price from C$6.40 per share to C$8.50 per share.
Increased quality of contingent resources
The 2C contingent resources are now estimated at 19.9 mmbbl (YE22: 14.1 mmbbl) with an average chance of development of ~45% (20 mbbl/d in 2026 and to >17 mbbl/d in 2027. We have increased our Core NAV and ReNAV from respectively C$5.55/sh and C$6.34/sh to ~C$7.50/sh and ~C$8.50/sh. Assuming US$70/bbl for Brent in 2026, our YE26 net cash forecast is now US$530 mm (~US$410 mm previously) while YE24 net cash is unchanged.
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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