Valeura Energy (TSX: VLE): Potential reserves additions following appraisal programme. Ratree is dry.
• Valeura has completed an 8 well drilling programme on Block B5/27.• Two wells at Jasmine C encountered more oil pay than expected.
• Two development wells at Ban Yen A are now on production and appraised new reservoirs, adding drilling locations and will likely contribute to reserves when next evaluated at year-end. One of the wells (BYA-35ST1) encountered an oil pay 100% larger than expected. The third well was an appraisal well. It encountered an oil-water contact deeper than expected but the reservoir was poorly developed at this location.
• At Jasmine D, two development wells encountered oil in their primary targets as well as upside volumes in secondary targets that will now be developed with further wells in future campaigns.
• The drilling programme has already offset natural declines. We currently forecast ~22 mbbl/d production in 2Q25 (vs. ~23.7 mbbl/d in 1Q25). This might be overly conservative. While Jasmine is a mature field, we anticipate that this campaign’s results will add reserves at YE25. It is also likely that decommissioning will be further delayed. We value each additional million barrel of reserves at Jasmine at ~US$8-10 mm.
• The Ratree exploration well did not encounter hydrocarbons. There are further trends on the block that could be explored as part of future drilling campaigns.
• Pending further visibility on the reserves addition at B5/27, we have not changed our Core NAV. However we have removed Ratree from our valuation. As a result our target new price is C$12.30 per share in line with our new ReNAV.
Valuation
Our 2P NAV is C$10.22 per share with a ReNAV of C$12.30 per share. Our unrisked NAV for the company’s low and medium 2C contingent resources is ~C$3 per share. Excluding further exploration spending, we forecast that the company YE27e net cash will be near the company current market cap.
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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