Valeura Energy (TSX: VLE): Ending 2025 with a bang. Busy 2026

• 4Q25 production averaged 24,721 bbl/d, comparing favourably with the 24,537 bbl/d reported during the first two weeks of November and coming in roughly 600 bbl/d above our forecasts. The strong quarter reflects the performance of the Jasmine drilling programme, where 9 new producers were drilled, including 8 horizontals. This campaign lifted Jasmine output from 7,300 bbl/d to 8,600 bbl/d.
• The company reported ~US$306 mm in cash at YE25, ~US$20 mm above our expectations, supported by favourable working‑capital movements and a reversal of the underlift position. FY25 sales volumes were broadly aligned with FY25 production.
• The 2026 production guidance has been set at 19.5–22.5 mbbl/d, with US$175–195 mm in capex, including US$7 mm for exploration and US$70 mm for the Wassana redevelopment (vs. our prior US$175 mm estimate excluding exploration). Opex is guided at US$190–220 mm.
• The Wassana redevelopment remains on schedule for first oil in 2Q27, with expected output of ~10 mbbl/d.
• In Turkey, Transatlantic has re‑entered and hydraulically stimulated the Devepinar‑1 well, which has flowed to surface continuously for more than three weeks. The company is now installing production tubing to enable a longer‑term test. A 2018 reserves audit estimated ~20 tcfe of gross unconventional prospective resources across the Turkish licences.
• With several near‑term catalysts not yet fully reflected in our valuation, we reiterate our C$12.70 per share target price.

Near term newsflow
Valeura is expected to publish its YE25 reserves audit in the second half of February, and we anticipate a material reserves‑replacement ratio given the strength of the drilling results over the course of 2025. Our unrisked valuation for the company’s low‑ and medium‑risk 2C resources stands at C$2.54/sh. During 1Q26, Valeura plans to provide further details on the Devepinar‑1 well test and outline next steps for the deep‑gas play. We also expect the company to take FID on its first gas development with PTT at Bussabong (Block G3/65), initially involving 1-2 platforms. Full development of the area could ultimately require 22–24 platforms, representing a potentially transformational opportunity for Valeura. Pending greater visibility, we are not yet attributing value to this licence in our NAV. Valeura continues to pursue acquisition opportunities across the region.

Valuation
We are now assuming ~21 mbbl/d production for 2026 (22.9 mbbl/d previously) and US$205 mm opex (US$225 mm previously). Our new Core NAV and ReNAV for Valeura are ~C$10.00/sh and C$12.65/sh respectively. We forecast that the company’s YE26 net cash will represent in excess of 55% of Valeura’s current market cap.