Valeura Energy (TSX: VLE): Net cash up by >US$40 mm since YE23
• 1Q24 production was 21.9 mbbl/d in line with our expectations. Production at the end of March was ~23 mbbl/d.• Net cash of US$193.6 mm (US$176.3 mm unrestricted) was high given that the company sold only 1.8 mmbbl in 1Q24 with inventory building-up ~0.21 mmbbl vs YE23 to 0.9 mmbbl. The inventory increase represents >US$16 mm of deferred operating cashflow at US$85/bbl for Brent.
• The US$193.6 mm net cash position as at the end of March represents an increase of US$42.4 mm compared to YE23.
• Price realizations in 1Q24 were US$1.5/bbl above Brent.
• The FY24 production guidance of 21.5-24.5 mbbl/d with US$205-235 mm opex and US$135-155 mm capex has been re-iterated.
• The company could publish a drilling update next week.
• We re-iterate our target price of C$9.00 per share. The story continues to be about strong free cashflow generation, reserves growth and exploration upside.
Valuation
Our forecasts are broadly unchanged. Our Core NAV and ReNAV are C$7.22 per share and C$9.04 per share respectively. Assuming US$85/bbl for Brent in 2024, 2025 and 2026, our YE26 net cash forecast would be US$670 mm at YE26. This compares with a current market cap of ~US$410 mm.
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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