Valeura Energy (TSX: VLE): Another impressive acquisition in Thailand
• Valeura is acquiring from PTTEP 40% WI in Blocks G1/65 and G3/65 with a combined area of 20,134 km2 and bordering some of the largest gas fields in Thailand (Erawan and Bongkot). The blocks have multiple gas discoveries that could be developed shortly as tie backs to existing infrastructure—positioning Valeura to potentially book its first gas reserves in the near term. Both licences offer oil potential adjacent to Valeura’s current production.• Located immediately south of the Rossukon oil field, the Maratee-Bussaba (G1/65) includes multiple oil drilling prospects. A targeted 3D seismic acquisition program will concentrate on the western section to support upcoming exploration. A development here could be tied in to PTTEP’s infrastructure in their operated block just to the east.
• The Nong Yao North-East area (G3/65) is expected to feature an oil-bearing fairway situated between Valeura’s Nong Yao field and the undeveloped Ubon field to the north. A new 3D seismic campaign is scheduled for 2025 to refine drill targets ahead of exploration drilling. Any commercial success could be tied back to Valeura’s Nong Yao field.
• The deal reflects ground-floor economics with Valeura paying 40% of incurred back costs—US$14.7 mm (net to Valeura) to date—and no promote. Additionally, Valeura will fund up to US$3.7 mm for ~165 km² of 3D seismic on Block G3/65 that it requested. These terms are considered highly favorable and underscore the strong strategic relationship with PTTEP, whose CEO has previously signaled the intention to collaborate closely on oil-focused initiatives. Given the limited visibility on gas development scale, assigning precise value to these assets remains premature. For now, we maintain our target price of C$12.70/sh.
Reflections on the potential gas developments
• At the Jarmjuree South area (G1/65), PTTEP has drilled three wells to appraise a liquid-rich gas discovery, with one well already confirmed to have encountered gas pay. The discovery could be tied to Erawan.
• Located within the North Malay Basin, the development of the Bussabong gas discoveries (G3/65) could be fast-tracked as a tie-back to Bongkot infrastructure. While regional gas contains relatively high CO₂ content, the local processing facilities are engineered to accommodate this.
• Average recent discovery size in the basin is estimated at
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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