Valeura Energy (TSX: VLE): Production guidance re-iterated but lower capex and additional resources
High production• Net production at Nong Yao has reached a stable level of ~12.1 mbbl/d. This compares with 6.3 mbbl/d in 2Q24.
• This production, when combined with the Wassana field being back online, has resulted in stable aggregate WI oil production over the past week of 26.2 mbbl/d. We are assuming only 20.4 mbbl/d for 3Q24, which might be too conservative.
• Valeura plans to maintain production at ~25 mbbl/d for at least the next four months. We are forecasting 24.8 mbbl/d production in 4Q24.
• We re-iterate our target price of C$10 per share in line with our new ReNAV.
• The key near term catalyst is the corporate restructuring associated with Manora, Nong Yao and Wassana. The company is carrying ~US$330 mm of losses. Corporate tax in Thailand is ~50%.
• We also anticipate that Valeura will grow its 2P reserves during 2024. Sanctioning the redevelopment of Wassana in early 2025 is expected to increase further the company’s 2P reserves position.
Valuation
Our Core NAV for the company (based on the YE23 2P reserves only) is ~C$7.30 per share. This only assumes Brent prices of ~US$75/bbl in 2025 and US$70/bbl from 2026. Our ReNAV of ~C$9.70 per share reflects the risked value of resources associated with the redevelopment of Wassana and Nong Yao D and exploration drilling at Ratree. Our ReNAV does not incorporate the new resources encountered by the Nong Yao appraisal wells. We estimate the company will hold ~US$255 mm at YE24. This represents ~60% of the 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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