Valeura Energy (TSX: VLE): FID at Wassana adds 8.6 mmbbl 2P reserves
• The 1Q25 production and cash position at the end of March were in line with previous indications. However the adjusted working capital was ~US$15 mm higher than cash given an oil inventory increase of 0.89 mmbbl.• Valeura has taken FID at Wassana (G10/48 licence), resulting in the conversion of 8.6 mmbbl 2C contingent resources into 2P reserves. Wassana’s 2P reserves now stand at 20.5 mmbbl, with the field expected to produce 10 mbbl/d in 2H27, representing almost 45% of FY24 production.
• The licence holds an additional 6.2 mmbbl 2C contingent resources linked to the Nirami Field (north) and Mayura discovery (south), both potential satellite developments for Wassana. In total, Wassana’s combined 2P reserves + 2C resources now amount to 26.7 mmbbl, improving upon the previous estimates of 12.9 mmbbl 2P reserves + 10.6 mmbbl heavy oil 2C resources (total: 23.5 mmbbl).
• As we incorporate the new reserves and resources, we raise our target price from C$12 to C$13 per share. Wassana’s redevelopment will extend the duration of plateau production and establish a new anchor infrastructure to support future regional developments. Given its low capex, low opex, and high IRR, the project enhances the resilience of the business in a low oil price environment.
• Even accounting for the new development capex, we project Valeura’s net cash position to exceed the current market cap by early 2028.
Developing Wassana
Wassana will be developed with a new Central Processing Platform (CPP) with 24 well slots. The total infrastructure capex is projected at US$120 mm, allocated across FY25 (US$40 mm), FY26 (US$70 mm), and FY27 (US$10 mm). The initial drilling program - comprising 16 horizontal development wells and one water injection well - is scheduled to begin at YE26, with an estimated cost of ~US$4.8 mm per well, tough the company notes a downward trend in rig rates that may reduce drilling costs. The existing MOPU will remain operational until YE27, supporting combined production levels (CPP + MOPU) of ~10 mbbl/d until YE27. Once offline, the CPP will sustain a plateau production of ~7.5 mbbl/d for 2-3 years. Opex is estimated at between US$12-16/bbl, while Valeura projects an IRR of >40% at US$60/bbl Brent.
Valuation
Our new Core NAV and ReNAV are respectively C$10.16 per share and C$12.63 per share.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.